“They were probably not in a position to continue,” said the trade body boss. “But actually, what transpires from what they've said recently is that they knew that back in 2016-17, when they started those structural changes within the business.”
As well as the sale of its general insurance business, this also included a change in its structure from a friendly society to a mutual insurer.
“But if [the business's shortcomings] only just become aware to members now, then clearly, that is a failure on the basis of keeping customers properly informed with what's happening,” said Shaw.
On whether the payments proposed were a “fair price” for members following the demutualisation, Shaw told MPs the proposal to pay to non-profit members was not something other insurers have done.
This is why the payouts seem small in comparison to the £6,000 Scottish Widows paid out to members back in 2000, and the £1,250 Standard Life paid to members more recently.
“£100 seems like a very small amount by comparison,” said Shaw. “It represents the amount that the with-profits committee believes is a fair amount to give up to incentivise the non-profit members to vote in favour of the deal.”
In his concluding statements, Shaw observed members have still got to make decisions “based on incomplete information”.
“It would be nice if they had more information,” he continued. “But also I'm acutely aware of the fact that the prospectus that's been given to them already is about 50 or 60 pages long. And even that doesn't give you a full picture of what's proposed.”
Shaw hoped there is more time before the vote to better inform members on the implications of the deal.
Ultimately, Shaw admitted LV found itself in “an unfortunate and sad position”. One where selling is “consistent with the challenges within the business”, even if the process by which it has communicated this sale has had its shortcomings.