Update from Chief executive
Update from the Chief Exec
Update from the Chief Executive
So as expected the General Election will be held on 6 May. Last month we launched the Mutuals Manifesto alongside other mutual trade bodies, designed to ensure the next Government takes proper account of mutuals in their policymaking.
The most recent polls suggest that the outcome of the election is uncertain, with a hung parliament looking increasingly likely. As a result we are continuing to lobby all the main parties about the value of mutuality, and I’m pleased to report that so far those audiences have been very receptive. Indeed, the parties are beginning to make pledges that envisage a growing role in the future for mutual ownership, and for ensuring that companies and other service providers put their customers right at the heart of what they are doing.
We will continue to press for reform to legislation and regulation, but as the rather content-free budget showed, policy making is for now dominated by political priorities rather more than social reform.
As well as engaging with the political parties, as you’ll see below, it has also been a busy period with FSA, with media and with member based work. Amongst all of this activity it is difficult sometimes to remember that as a trade body AFM is just three months old. As a movement, the mutual sector has always embraced rich and poor, young and old as equal, and so I end this introduction by paying tribute to Colin Paskell, a fantastic supporter of the mutual sector for many years, who died last week.
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1. AFM members and Associate members
It’s been pleasing to see an upward trend in business levels reported by the sector so far this year, with some significant increases in new business alongside a very welcome improvement in investment returns. It is now more than 12 months since the low point in the stockmarket, but worth remembering that markets are now only returning to levels seen in the first half of 2008.
But it is clear that no-one is being complacent, and FSA continues to monitor closely whether regulated firms are solvent and have a viable business strategy. Indeed two further friendly societies closed at the end of 2009- reinforcing how tough the climate has been.
With that in mind, it is welcome news to report that as well as the existing 56 member companies of AFM, we are beginning to talk to other prospective members. We are also in the process of welcoming a number of new Associate members- more of this in our next edition. In the meantime we continue to focus on offering good value for AFM membership, and I’m pleased to see alongside this update, some relevant and interesting articles from members and Associate members in this edition of Mutually Yours- suggestions for future articles are always welcome.
2. The AFM Conference, 2010
It is pleasing to have had so many enquiries on this and I am pleased to confirm that AFM will be holding its first annual Conference this Autumn. This will be a chance to understand what AFM is doing, how we are highlighting the value of the mutual sector, and to meet friends and colleagues from across the sector. Full details of the event, to be held in Central London, will be released shortly.
3. Common Promotion
The Common Promotion provides a very clear presentation of the mutual advantage- the tangible benefits of being a member of a mutual organisation. A summary of the key messages as well as the underlying evidence to support them is available on the AFM website. We will be updating the evidence regularly: see for example the separate article on with profits.
The AFM Board is keen that all members include the Common Promotion on their own website; many thanks to those that have already done so. If you haven’t yet added it to your site, please let me know if you need any help.
For more information, see: Common Promotion.
4. Annotated Combined Code, 2009 compliance
The ACC questionnaire was issued to AFM members last month. The questionnaire provides a summary of the key elements of the Annotated Combined Code, to help mutuals complete their corporate governance statement, which includes a comply or explain statement to summarise their performance against the ACC.
HM Treasury is organising a panel, chaired by the Financial Reporting Council, and attended by Treasury, FSA and the relevant trade bodies, to discuss the future of governance codes in the mutual sector. We will argue that the current self-regulatory approach is working well, so this year’s exercise is more important than ever.
As part of a focus on delivering consistently high standards of governance in mutual insurers, this year AFM will be helping to make corporate governance statements transparent, and enabling mutual insurers to identify good practice. The deadline for sending in summary data is end of April for larger companies and end of June for smaller companies.
5. Regulatory Issues
- Dear CEO letter to Mutuals with a with profits fund
It is over three months since AFM members responded to the Dear CEO letter, and during that time FSA supervisors and the policy teams have been weighing up those responses. Some firms have been asked for more information about business volumes- as FSA seeks no doubt to test the viability of the future strategy. On the whole though, most larger AFM members indicate they are awaiting substantive feedback.
FSA recently convened a meeting of Holloway providers, to explore the implications of the Dear CEO letter as well as the impact of the Retail Distribution Review. The meeting was attended by seven AFM members, as well as actuaries, lawyers, policymakers and supervisors of FSA. The meeting showed very clearly to the FSA audiences how differently the Holloway contract has developed in different providers and that Holloway is first and foremost a protection policy. We await further feedback.
It is likely that firms will receive individual engagement from supervisors. At the recent Chief Financial Officers network we discussed ways in which AFM members could share and access information in a confidential environment, and as a result Telos (AFM Associate members) have set up a forum on the Linked in site. AFM members and Associates can access the forum via the link below, and I encourage you to visit and comment as appropriate:
- Consultation responses and other engagement
During March AFM attended a series of meetings with FSA, with issues ranging between the Dear CEO letter, Solvency II, reform of the Compensation Scheme, FSA communications and changes to the Controlled Function regime. I was also invited to join a panel at the FSA Insurance Sector Conference- which also witnessed effective representation from AFM members.
There is a growing commitment from FSA to engage with the sector and to pre-consult on issues that have significant consequences. This is very welcome, though as our response to CP10/3 (Effective Corporate Governance) there is still a tendency to develop one-size-fits-all solutions, which are intended to resolve issues in big banks but do not translate well to other sectors and to smaller firms (I will be sending in our response this week). FSA has agreed to a meeting with me later this month to explore how they can better take account of the mutual sector in their policy development.
The AFM Regulation Committee continues to consultations from FSA, Treasury and elsewhere that we should respond to.
- FSA seminar for smaller insurers
FSA is organising a seminar for smaller insurers on 10 June. This is part of a welcome initiative from the smaller firms division to engage with regulated firms more effectively, and coincides with a number of previously supervised AFM members being moved to the division. I have been invited to speak.
The main focus of the day will be Solvency II, and with QIS5 to be unveiled in a few months’ time, and new rules in development for non-Directives, there will be plenty of relevant material. FSA is keen that there is significant attendance from firms and will be issuing full details soon, and have reassured me that in response to my complaint about the price of the FSA conference, that the cost will be kept to a minimum.
6. Political issues
In March AFM attended a series of events with politicians; principally:
- Mark Hoban, Shadow Treasury Minister, regarding the future of the Child Trust Fund with a possible Conservative government. During the meeting, also attended by The Childrens’ Mutual, Family and TISA, we put forward counter proposals to show how a revised CTF might save significant amounts of public money, whilst remaining universal and acting as an effective way of getting people to start saving. Mr Hoban has promised to take our proposals to senior colleagues.
- Sarah McCarthy Fry, Exchequer Secretary to the Treasury, with BSA and ABCUL on savings issues ahead of the Budget. This was part of a regular liaison process the Minister has developed to keep abreast of issues that may be covered in the Budget.
- Vince Cable, Lib Dem Shadow Chancellor and colleagues, with other mutual trade bodies on the Mutuals Manifesto and ways in which the next government might support the mutual sector. The Liberal Democrats are keen to take forward a number of our ideas into their manifesto, and in particular the proposal of a government office for Mutuals.
- Sarah McCarthy Fry (again), with other mutual trade bodies on the Mutuals Manifesto. The Minister concluded that it was very helpful to hear how different parts of the mutual sector were working across such a wide range of issues and sectors, and will also explore how this creates the case for a government office for mutuals.
Whilst the dissolution of Parliament means that politicians will be busy away from Westminster over the next few weeks, there are a number of issues, including the review of corporate governance codes for mutuals, and insurance taxation that we will continue to liaise on with officials.
7. AFM in the press
We’ve seen no fewer than 22 articles in the national, regional and trade press that have referred to AFM since its launch. That is more than one a week, and demonstrates a growing interest in the sector. Whilst most articles have focused on the possible implications of the Dear CEO letter, there has been an increase in articles about the value of mutuals more broadly.
We are meeting a number of journalists over the Spring, and will continue to look for topical issues that place the sector in a positive light, and where we have unambiguous evidence of the mutual advantage. If you have any positive stories you’d like to share, please let me know.
8. AFM events
- COO network: the network will be meeting at the offices of Family Investments in Brighton on 30 April. As well as presentations from a number of Associate members, there will be plenty of opportunity to exchange views and find out what colleagues in the sector are doing. The full agenda is available on the AFM website.
- Smaller societies and mutuals committee: all AFM members who meet the definition of a smaller company within the ACC are invited to attend this group. The first meeting will be on 26th May, and more details will be available soon.
- CFO network: there was a good attendance for the recent network. Slides and notes from the network are available on the AFM website. Members in particular will find the slides on IFRS and Solvency II invaluable. The next network meeting is due to be held on 1 July.
- Corporate Secretaries/ Compliance Officers Network: we are beginning to consider the timing and agenda for this network, which combines two broadly similar groupings from AMI and AFS respectively. More details to follow.
- Other events: amongst events AFM members may also be interested in are:
- the Institute of Money Laundering Prevention Officers has an annual conference on 17/18 May in Birmingham;
- AMICE is holding its biennial congress in Genoa, Italy from 24 to 26 May;
- FSA is running a Smaller Insurers’ Seminar on 10 June in Canary Wharf;
- various AFM Associate members are organising events during May.
For more information on the work of AFM, visit our websites:
www.financialmutuals.org for members and all professional contacts
www.ownedbyyou.org for consumers
www.funtosave.org for children, parents and teachers