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Providers stand by mutuality after LV sale

Providers stand by mutuality after LV sale
 Credit: Pixabay via Pexels

Providers are standing by their mutuality status after news emerged of LV’s agreed sale to a private investment firm.

The acquisition of LV by Bain Capital, which is subject to regulatory and member approval, would see the provider demutualise.

Martin Shaw, chief executive of the Association of Financial Mutuals, said while the demutualisation of LV was “regretted”, it did not mark any “denouement” for mutuality more generally.

Mr Shaw said: “There are many thriving mutuals in the UK today, and in parts of the insurance sector the presence of member-owned businesses is significant and continues to ensure competition is delivered in the best interests of customers.”

Gordon Hull, chief executive officer at British Friendly, also attested to the success of financial services mutuals.

He said: “Mutuals are a force for good in society and their values speak to advisers and consumers who want to deal with providers whose purpose is more than maximising returns for shareholders. We believe it is the best way of aligning business and customer interests for the long term.

“Mutual models do work and financial services mutuals are successful across the world. UK consumers currently benefit from a diverse choice of financial providers and it would be to both adviser and consumer detriment to see this choice diminish.”

But Mr Hull also said that mutuals could not “rest on [their] laurels”.

“[Mutuals] must work hard to ensure we deliver value for advisers and our members. If this is done, we believe there is a bright future for mutuals.”

In an announcement of its agreed acquisition, LV said it was “clear” to the board that as a newly standalone life and pensions business it would require significant, long-term investment to be sustainable, following the sale of its general insurance business in 2019.

And in LV’s communication to members, the provider said that members would need to fund investment if it remained a mutual.

But elsewhere Ann-Marie O’Dea, chief executive officer at Shepherds Friendly, backed the mutuality model.

Ms O’Dea commented: “As a mutual, we are owned by our members and this means we can focus on delivering products and services that best meet their needs. We believe in the mutual society ethos as it places our members and their advisers at the heart of everything we do.

“Our recent rebrand demonstrates our continuing commitment to mutuality and signifies the next step in ensuring we can continue to help new and existing members safeguard their future in a simple and straightforward way.”

Shepherds Friendly was established in 1826 and unveiled a new website, logo and strapline in November as part of its rebrand.

At the time, Ms O’Dea said: “Our new brand identity stands us in good stead to continue providing a great service to our members, and also our intermediaries, for the next 194 years and beyond.”