Update from the Chief Executive
Update from the Chief Executive
Welcome to the June edition of Mutually Yours- the online newsletter from the Association of Financial Mutuals.
2010 is almost half-way through! At this stage there are more reasons to be gloomy than optimistic about the prospects for the year, with mixed messages on new business volumes, a falling stock market, an austerity budget, a changing, and escalation in, regulation over the next two years, and uncertainty in some business plans.
All this is of course not simply a mutual phenomenon, and indeed there is frenetic activity in the insurance sector more broadly- as judged by recent announcements from and speculation about Prudential, Axa, Zurich and Brit Insurance, as well as continued uncertainty about some of the bancassurers.
Thankfully it isn’t all gloom- and there are positive stories here and elsewhere in this edition of Mutually Yours about the vital and valuable job that mutuals are performing and about the high standards they are delivering. What with that, good summer weather and the prospect of England surviving at least another week in the World Cup, there is plenty to remain upbeat about.
I hope you enjoy this month’s newsletter; as ever I welcome any comments, and suggestions of topics for the future.
If you have any comments, please contact
1. Annotated Combined Code/ Corporate Governance
The larger AFM members have all completed this year’s ACC questionnaire. The deadline for smaller companies to send in their questionnaire is the end of June.
Between them the 23 largest members of AFM once again showed very high levels of reported compliance with the Code. As organisations they had almost 18 million customers at the end of 2009. Fuller analysis of the questionnaire responses and a review of governance will be provided later in the year.
AFM members are reminded that as well as returning a questionnaire this year, AFM will also wherever possible provide a link to the corporate governance in each member’s annual report. This will provide a better transparency of governance arrangements in mutuals, which mirrors the changes in the UK corporate governance code (previously known as the Combined Code). I will be forwarding more details on this aspect of the exercise soon.
In the meantime, please continue to forward to AFM a copy of your annual report. Our postal address is PO Box 41, Altrincham, Cheshire, WA14 4PD.
2. Common Promotion
Have you placed the Common Promotion on your website? AFM members are encouraged to explain clearly and positively the advantages of mutuality via the Common Promotion. If you haven’t yet included details on your website, or need a copy of the AFM logo to highlight your membership, please contact:
The Common Promotion provides tangible evidence of the value of mutuality, and is supported wherever possible by independent research. This month’s Mutually Yours includes an article on the superior standards of service provided by mutual organisations. For more information, see: Common Promotion.
3. Fun to save
If you’ve looked at the fun to save website (www.funtosave.org) I’m sure you will have been impressed at how well and enjoyably it provides financial education for young children.
At a recent meeting the AFM Board agreed to proposals to extend the site, with more content for the current Key Stage 1 audience, and a new venture into Key Stage 2. We are also aiming to achieve pfeg accreditation in the very near future.
There are very few good websites dedicated to financial education, and fun to save gives very good exposure to the mutual sector- with positive reviews on teachers’ websites, enthusiastic uptake by children and encouraging support from journalists.
Fun to save is funded by modest, voluntary contributions from a number of financial mutuals. If you would like to join them, please contact: email@example.com .
4. Regulatory Issues
- Dear CEO letter to Mutuals with a with profits fund
In brief- no significant update on this- FSA continues to gather data from firms, but is not yet in a position to go back in detail. One exception to that has been MGM Advantage, and there is a separate article this month by CEO Chris Evans on the development of their new annuity product, and their work to ensure it met FSA’s expectations for with profits.
Meanwhile, FSA are due to publish the conclusions of their with profits review at the end of this month. As trailed in the recent insurance newsletter there are likely to be consequences for all with profits providers.
- Consultation responses
Given the signal from the new government that it is keen to support the mutual sector, we are finding a significant volume of mutual issues to comment on. This is a busy time of year for consultation responses, with six responses in June alone. These cover FSA consultations, but also papers from Treasury, HMRC and the Law Commission. All responses are posted on the AFM website once dispatched: http://www.financialmutuals.org/index.php?option=com_content&view=article&id=54&Itemid=34
- Solvency II, QIS5 roadshows; FSA seminar for smaller insurers
FSA recently ran a seminar for smaller insurers which was attended by over 150 people. The focus was on explaining FSA’s changing approach to regulation of smaller insurers, stress testing and in particular on Solvency II (and the regime for non-Directives from 2013). The seminar shows renewed and welcomed support for smaller insurers from Jeremy Heales team at the FSA, and will be followed in the summer and autumn by roadshows devoted to the QIS5 exercise (see below for more information).
5. Political issues
The new government is busy preparing for next week’s Budget, but even before that we have seen a series of announcements which clearly signal the scale of issues they will be acting on. Indeed as I write there is plenty of speculation about the Mansion House speech and the future of the FSA.
AFM wrote to the Chancellor ahead of the Budget and a copy of the letter is included in this month’s newsletter. The letter reflects on the impact of last month’s announcement about the demise of the Child Trust Fund. As providers of more than half of all CTFs, many AFM members are significantly affected by this decision, and HMRC is currently liaising with providers as part of its impact assessment, whilst FSA will be in contact soon to understand how this impacts those businesses affected by the announcement.
In our letter to the Chancellor we have offered thoughts on how to soften the blow, whilst at the same time we have also offered some thoughts on how to encourage long term savings, and where mutual insurers can offer assistance to the government’s planning priorities.
It would appear that the government is receptive to such suggestions: in response to a question from the MP for Stafford on Wednesday’s debate on financial services regulation, the Chancellor confirmed that the government is keen to strengthen and support the mutual sector, and will be setting out the details for how they propose to do that over the next few weeks.
6. AFM events
- AFM Conference: preparations for the annual conference and AGM are progressing, and full joining instructions will be available soon. In the meantime, please make a note of the dates in your diary: 18 and 19 October. The conference is being held this year at the Merchant Taylors’ Hall in Central London.
- CFO network: The next network meeting will be held at the offices of NFU Mutual in Stratford on Avon on 1 July. The agenda will include Solvency II, IFRS, Financial Crime, Arrow II and the Mutual Transfers; details have already been sent to previous attendees of the network, and reservations are brisk; let me know if you’d like more information.
- COO network: following the most recent and very well-received meeting of the network on 30 April, the incoming Chairman, Graham Trill of Royal London, has issued a survey to attendees to explore how the network can evolve over time. We will consider the results shortly and plan the next meeting with this in mind.
- Corporate Secretaries/Compliance Officers Network: we have received a very good response to a note that was issued to potential attendees, on behalf of new Chairman of the network, Robert Wharton of Thring Townsend, and are in the process of pulling together an agenda for the next meeting. More details to follow.
- Health Network: Chairman of the network, Bill McPate has recently written to a range of AFM members, with a view to assessing how best to develop the network for the future.
- Smaller societies and mutuals committee: the first meeting of this group was held on 26th May; copies of the presentations are available on the AFM website. The next meeting will be held on 18th October as part of the AFM conference.
7. Other events you may be interested in the following
- FSA is running a series of roadshows ahead of the QIS5 exercise. Hopefully all AFM members have received details of this, and I would encourage all Directives to get to one of the roadshows, and indeed some non-Directives. QIS5 seems all but essential for any firm that will need to comply with Solvency II. For more information, see:
- Finally, I have been asked by HRMC to highlight the following- which reflects the requirement for all companies to submit tax returns electronically in future.
In relation to mandatory filing for Corporation Tax, the Business Tax Programme are setting up an HMRC-hosted exhibition on Wednesday, 30 June 2010, at which software developers will be able to showcase their iXBRL-enabled software solutions. More than 20 developers have confirmed they will attend to demonstrate their products/services, including all the 'big players' in the CT comps software and final accounts production software markets.
Details are as follows:
- Date & Time - Wednesday, 30 June 2010, open to the public from 9.30am until 5.00pm.
- Venue - Chelsea Football Club, Stamford Bridge, Fulham Road, London SW6 1HS (the nearest tube station is Fulham Broadway).
- Format - Exhibition only, no keynote speeches or presentations
- Free of charge although people should phone the BEST Workshop Bookings Team on 0845 603 2691 to register their attendance in order that they can gauge likely numbers
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.