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MPs to discuss ‘future for mutuals’

MPs to discuss ‘future for mutuals’

The Treasury Committee is holding a “one-off” session to discuss the future for mutual firms amidst the backdrop of LV’s demutualisation.

On November 24, MPs will discuss the health of mutually owned firms, their role in financial services, the impact of Covid-19 on mutuals, and whether demutualisation is “a threat or an opportunity”.

According to the Treasury Committee, MPs may question witnesses on the implications of LV’s proposed sale to Bain Capital, and whether there could be a wider impact on the market.

Those set to be questioned by the committee include Martin Shaw, chief executive for the Association of Financial Mutuals, Mike Regnier, chief executive of Yorkshire Building Society, and Lucky Chandrasekera, chief executive of London Mutual Credit Union.

LV’s members are set to vote on its demutualisation on December 10. Earlier this year, MPs had expressed their concerns over the deal being rushed, and of LV not being “open and transparent” with its members about its intentions.

But regulators have since scrutinised the deal. Last month, the FCA published its “non-objection” on LV putting proposals for its demutualisation to a member vote.

The earlier this month LV said it would pay its members £111m, or £100 each, in one-off payments if the deal with Bain Capital goes ahead. 

However, the firm cautioned this figure could drop to £60 per member if the transaction is not completed via a Part VII transfer - a type of insurance business transfer scheme which would effect LV's demutualisation - which still requires the backing of two member votes and the court.

Earlier this week, LV confirmed its rival Royal London had sent an email to its chief executive outlining a fresh bid for the firm, after it lost to Bain Capital at the end of last year.

Alan Cook, LV’s chairman, has since accused Royal London’s timed intervention of being “destabilising”, ahead of its member vote next month.

In an interview with Evening Standard, LV's chief executive Mark Hartigan also said: "We wait a year, we’re in the middle of a very important vote, at the last minute they lob a grenade."

MPs have since weighed in on the LV-Royal London saga.

Gareth Thomas, Labour MP for Harrow West, tweeted on November 16: “Mr Hartigan’s complaints would carry more weight if LV would publish in full the bids from both Bain & Royal London; the tender docs & a clear, open rationale why such a deal is needed. Instead they’ve been opaque & even the FCA has told them to improve their comms with members.”

In April, MPs aired their concerns over the fairness of the deal for LV’s members.

In a 76-page report by the All Party Parliamentary Group for mutuals, MPs alleged that although a deal had been agreed with Bain Capital, LV was also exploring potential sales to other non-mutuals at the same time as the company provided public reassurance to its members, which could be seen as misleading to its members.