Latest Press Releases and Comments

Here we cover all the very latest news. If you have a specific enquiry or something you’d like to find out about, please get in touch. Contact Martin Shaw at AFM via email or call 0788 754 7195.

26 November 2014


Culture and diversity in financial services

Earlier this month the Association of Financial Mutuals and the Building Societies Association launched the ‘Manifesto for Financial Mutuals’, to highlight to the political parties ahead of next year’s general election, how a more effective regime for financial mutuals would help consumers to get a fairer deal from the financial services industry.  Our proposals largely support existing government policy to restore trust in the industry, and to ‘promote diversity and support mutuals’.

In the few days since, a host of new reports has further strengthened these messages:

• The Social Markets Foundation on Monday launched a report on “Good culture: does the model matter in financial services?”: which found that most people believe financial companies put the interests of shareholders ahead of customers.  Their report sees a need to improve corporate diversity in financial services, as a means of protecting and supporting consumers, and that establishing the right culture is key to this.  Speaking at the launch event, the Economic Secretary indicated that people are “sick and tired of the scandals in financial services”, and explained the extensive work underway to address failings in corporate culture, including work to promote new sources of finance including via mutuals.  In turn, Mark Austen, Chairman of LV=, who sponsored the report, emphasised how their values deliver a good culture and how this in turn has stimulated their recent success.

• Also on Monday, the Building Societies Association issued an updated corporate diversity index for financial services, which showed a decline in diversity in the mortgage and savings markets in 2013.  Commenting on the report, the Economic Secretary stated that  “Corporate diversity is vitally important in financial services… to help customers get a better deal”.

• Another think tank, New City Agenda has today launched a report on the culture of retail banking in the UK, citing that British banks have since 2000 paid £38 billion in fines relating to their retail businesses, and since 2008 have received over 20 million customer complaints.  Policy intervention since has focused on structural changes, whilst cultural change has been left largely to industry to address.  The report found that aggressive sales culture was particularly prevalent amongst demutualised building societies, whilst in contrast the majority of organisations offering the best service in banking were mutuals.

• Today again the Prudential Regulatory Authority has issued a consultationsetting out its plans for a new ‘Senior Insurance Managers Regime’, to ensure leaders of insurers behave with integrity, honesty and skill- or suffer the consequences directly. This is complemented by a consultation by the Financial Conduct Authority on changes to its Approved Persons Regime.

• Earlier this month AFM released an updated version of the Annotated Corporate Governance Code for Mutual Insurers, with clear messages about the importance of the ‘tone from the top’, and the continuing need for Boards to lead the right culture in their organisations.

So it seems that there is a healthy debate about how culture and diversity fit at present.  That isn't to pretend that the culture in mutuals is right for all organisations, or even that culture is right in all mutuals, but as the Manifesto document emphasises, a diverse market for financial services is more likely to produce good outcomes for consumers.

If you have a view on the issue, let me know; our Twitter account is @ownedbyyou.


17 November 2014

AFM issues an updated version of the UK Corporate Governance Code for Mutual Insurers

Following amendments to its Code by the Financial Reporting Council, AFM has issued an amended version of its annotated Code.  All AFM members agree to comply with the principles of the Code, and report to AFM annually on all aspects of their compliance.  A copy of the revised Code can be downloaded here.

13 November 2014

A Manifesto for Financial Mutuals

The  Association of Financial Mutuals (AFM) and the Building Societies Association (BSA) have today launched a four pronged manifesto to help ensure consumers get a fair deal from financial services. The campaign groups representing building societies and mutual insurers across the country have called for action from Government and regulators ahead of next year’s General Election to fix the regulatory and legal imbalance that could stifle the mutual sector.

‘A Manifesto for Financial Mutuals’, aims to level the playing field between shareholder controlled plcs and mutually owned providers. It calls for:

• A fair deal for consumers
• A level playing field for financial mutuals
• A rational approach by regulators to capital
• A more coordinated approach to promoting mutuals, creating a stronger savings culture and tackling the housing crisis

Robin Fieth, Chief Executive of the BSA commented:

“There is a widespread consensus that a diverse financial sector benefits consumers and the economy alike. Therefore, it is a bitter irony that in the effort to address poor behaviour by some plcs and prevent another financial crisis, the resulting legislative and regulatory framework threatens to undermine rather than support corporate diversity.

“Ratcheting up regulation across the board is leading to a matrix of rigid rules that disproportionately affects mutuals. Instead, the differences inherent in the mutual structure should be considered side by side with other types of financial services businesses. Today we are setting out a plan to redress the balance and strengthen the mutual sector.”

Martin Shaw, Chief Executive of the AFM added:

“Consumers are being left with little choice but to go back to the very firms that caused the last recession in the first place. Far from fostering diversity and ensuring the financial sector is more resilient, the present regulatory landscape is tilted towards a one size fits all model.

“It should be a national scandal that not a single new mutual has been set up since the last decade of the last century. Politicians need to translate their aspirations for greater diversity into concrete actions to help the financial mutuals sector to compete on level terms, and to deliver a fairer marketplace for consumers.”

A fully copy of the Manifesto is available to download here

29 August 2014

AFM has produced a new report looking at Corporate Governance amongst mutual insurers and friendly societies in the last 12 months.  You can download a summary of the report here.

31 January 2014

The Association of Financial Mutuals has written to the Chancellor ahead of his Budget statement on 19 March. The letter sets out briefly some suggestions for how the government can work with mutual insurers and friendly societies, to address concerns about financial inclusion.

The letter is available to download here

24 September 2013


Party conference diary: Labour, 23 September


AFM is attending each of the party conferences this year, running the breadth of the country in successive weeks, from Glasgow to Brighton to Manchester.  It can be confusing to remember which audience you are speaking to though the catering often helps: quiche for the LibDems, chips at Labour, and red meat- raw at the Conservatives…

Yesterday I participated in a fringe meeting, organised by Mutuo, with the purpose of seeking support for the Mutuals’ Redeemable Shares Bill.  Around 40 conference delgates joined us in a sun-drenched meeting room, overlooking the sea within the Grand Hotel.

The meeting was chaired by Andy Love MP (member of the Treasury Select Committee), and my fellow speaker from the mutual sector was Gareth Swarbrick from Rochdale Boroughwide Housing.  With the main conference debating the economy, Chris Leslie MP, Shadow Financial Secretary made a delayed but telling appearance.

Andy Love compelled attendees to go to the Mutuo website,, to complete the MPs contact letter.   As Andy stated, this is vital in achieving government support for the Bill, as currently it is constituted as a Private Members Bill, which risks being timed out before the next election.

Last week Lord Newby of the LibDems had indicated that the government agenda was crowded, though as Andy Love and Chris Leslie both emphasised, the Bill is simple in construct and largely permissive and so should not occupy too much time at the Treasury.

Chris Leslie’s other main contribution was to offer continued support for the mutual sector.  He indicated that Labour’s next election manifesto will explore this and encouraged the sector to come forward with new ideas, and ways of removing barriers to entry.  As he stated:

“We have a strong commitment to mutuality and we need the sector to point us in the right direction. If it is a minister for mutuals then we can consider it, we could have that sort of leadership in Government, or is it about more practical steps. I have certainly got more than an open mind on these questions and we have a thirst in wanting to help the sector.”

This is an encouraging commitment and one we will follow up on. I should add that my own contribution to the discussion focused on the value of mutuals in insurance and why the Bill matters (to mutuals, their customers, or indeed anyone that has an insurance policy), and Gareth offered a poignant contribution on the difficulties for a housing association in finding funding and how the Bill will resolve this.

Next week we join the Conservatives in Manchester.


Martin Shaw

22 July 2013


This afternoon the House of Lords gave its assent to the first reading of a draft bill presented by Lord Naseby, which marks a major opportunity for the mutual sector.

Currently, mutuals raise capital from retained earnings or borrowing and can't raise additional funds from their members or other external sources.

These restrictions can limit their capacity to adapt to new market conditions, secure maximum investment in the business, or their ability to grow through acquisition. 

Mutuals should be permitted to raise capital from existing and new members through new capital instruments (redeemable shares) which this legislation seeks to enable.

The Mutuals’ Redeemable Shares Bill would create a legal framework for these shares to be issued in all types of Industrial & Provident Society, Friendly Society and Mutual Insurers.  The Bill will also provide powers to make regulations to deal with the detailed implementation of such schemes.  Such powers would be exercised under the affirmative resolution procedure of both Houses of Parliament.

In summary, the Bill will:

• Create an optional new and additional class of redeemable share through which specified mutuals can raise additional funds.

• Provide consequential rights to specified mutual society members.

• Restrict the voting rights of certain members who hold only redeemable shares, so that they cannot participate in any decisions to transfer, merge or dissolve the mutual.

Mutuo Chief Executive Peter Hunt said,

‘The challenge has been to amend the capital regime in mutuals to permit the injection of external capital, whilst safeguarding both the core purpose and mutual integrity of the business.  We can point to existing examples of where this has been achieved in other countries such as Canada and The Netherlands. 

Lord Naseby’s Bill offers a radical step for UK mutuals which are keen to take advantage of their high levels of trust among customers and members.’

Martin Shaw, Chief Executive, Association of Financial Mutuals commented: "We wholeheartedly support the Bill, and the welcome opportunity it would bring for mutual insurers and friendly societies – it can only be good for healthy competition in financial services. Being able to raise new forms of capital will help mutuals to deliver their business strategy more effectively, to adapt better to new market conditions, and to grow through acquisition.

It is still early in the process, but we might expect this form of capital raising to include retail bonds, which could prove attractive to some consumers.  The main reason we are keen to support this work would be to look for longer term strategic opportunities for the sector since it is already well-placed and on track to meet current capital requirements."

This is a complex process and the legislation will take some time to complete, and AFM is pleased to be actively supporting this work.  For further information, contact, or go

23 May 2013


Financial services industry set for overhaul

as one in two Brits plan to ditch their providers this year

The notion of Brits being more likely to get divorced than change bank is a thing of the past. Around one in two people plan to switch financial providers this year, according to new research from the Association of Financial Mutuals (AFM).

Whilst many blame the banks for state of the economy*, austerity has also driven many consumers to be more demanding on what they expect from their financial services provider.

The AFM survey of a nationally representative sample of more than 2,000 people explored people’s attitudes to the range of financial companies people dealt with on a day-to-day basis to meet their financial needs, from banking and savings to insurance, cards and investments.

Overall, 47% of British adults were planning to change financial services providers this year - with 31% of people planning to change two or more of their service providers and a further 17% planned to switch one provider.

With consumers used to the idea of shopping around for general insurance quotes, it was perhaps not a surprise that 27% of people said that they planned to shop around for an alternative general insurance provider in the year ahead. After insurance, almost one in five (18%) planned to change banks or savings provider, dashing the old adage that Brits are more likely to get divorced than change their banks. Additionally, more than one in 10 people (12%) wanted to change their investment firm this year and 11 per cent planned to switch their loan or card provider.

The research also delved into what customers were now looking for in a good financial services provider. Of those who said that they wanted to switch banks or savings provider this year, the top three things that they would be looking for included:

·       Financial products that are easier to understand (50%);

·       Financial products that deliver good value in the long term (65%);

·       An organisation that puts customer’s interests before those of shareholders (46%).

Looking at other financial services providers, ‘value for money in the long-term’ was at the top of people’s wish list when choosing a credit card or mortgage provider (57%). When asked about investment providers, 57% said that ‘products that are easy to understand’ would be the most important factor. Keeping health at home would be a key consideration for most Britons – 41% said that choosing a British product provider would be an important consideration when picking a health or life insurer.

Martin Shaw, Chief Executive of the Association of Financial Mutuals commented:“The research certainly busts the myth that people are more likely to get divorced than change their bank and it is possible that the broken trust in some sectors of financial services is now coming home to roost. Whilst the tough economic climate is forcing many families to become savvier in shopping around and making their money go further, it also seems that what people are looking for from a financial services provider is changing. The short-termism of a good headline rate is being offset by many people now looking for long-term value, simpler products and better service. And after the various bank scandals, it is understandable why more people want to deal with a financial company that puts customers before shareholders.”

“With hundreds of mutuals open for business in Britain today, financial mutuals offer consumers a genuine alternative, organisations run by and for their members, that are driven by offering simple products and good service to their members. Healthy competition in the services industry requires diversity for consumers to have genuine choices – and the mutual sector has its door open for people that want to deal with a different kind of financial services provider.”


The research was conducted by YouGov for AFM, among a GB representative sample of 2,000 people in April 2013.

* Footnote: [1]69% of people surveyed by Vision Critical blamed the banks as the industry sector of 16 options for getting the country into the mess it was in, or making things worse than they needed to be (October 2012, Sample 2000 people). Banks were also regarded as the worst offenders (of 16 sectors surveyed) at covering things up when they make a mistake (48%). Banks (27%), investment companies (27%) and insurance companies (37%) were seen to be the worst sectors for baffling consumers with jargon. Other sectors included in the survey included: supermarkets, airlines, car dealerships, hotels, holiday companies, utilities, retailers and building companies.



04 January 2013

AFM comments on 'Mutuality and with-profits funds: a way forward' 


AFM and its members very much welcome the approach taken by FSA in CP12/38, coming as it does after more than six years of active engagement with mutual insurers.  The consultation demonstrates some fresh thinking from the regulator on their approach to mutual insurers with a with-profits fund, and therefore reflects the wider trend in public policy to, as the government has said, 'foster diversity and promote mutuals'.  .

The consultation recognises that for some mutual insurers volumes of new with-profits business have been reducing, and that the rules create barriers to effectively developing alternative business plans.  Mutuals are currently at a competitive disadvantage to PLC insurers, because most or all of their assets are subject to conduct of business rules, and there are therefore constraints on the amount of capital available.  The FSA proposals envisage that mutual insurers can develop a supervisory-led solution to this, which might include, but is not limited to separating the various interests in the with-profits fund, in other words to create separate pots for with-profits policyholder funds, non-profit policyholder funds, and mutual members' (capital) funds.  Any solution would need to satisfy the FCA that the solution is fair to all policyholders, and satisfy the PRA that the mutual remains financially sound, and the consultation stresses that the regulators will take a proportionate approach which will not preclude smaller mutuals.

As the consultation acknowledges, mutual market share in insurance has fallen from over 50% 30 years ago to around 7% today.  The fresh approach from the FSA may have come a little late in the day, but should help to remove some of the motivations to demutualise, or for a with-profits mutual to have to wind up- as long as it has a relevant future business plan, and can demonstrate it remains wholly accountable to its members.

AFM will respond to the consultation by the deadline of 19 March, and we aim to be positive about the likelihood of these proposals providing a secure foundation for a stronger mutual sector, whilst looking for a little more explanation of some of the finer points in the paper.

22 October 2012

The Association of Financial Mutuals appoints new Chairman and vice-Chairman

The member organisations of the Association of Financial Mutuals (AFM) - the trade body that represents mutual insurers, friendly societies and other financial mutuals in the UK – have appointed a new Chairman and Vice-Chairman.

At its Annual General Meeting on 17 October 2012, AFM’s members approved the appointment of Mark Goodale, Chief Executive of Reliance Mutual as Chairman, and of Phil Loney, Group Chief Executive of Royal London as Vice-Chairman.

The appointments were made following the retirement of incumbent Chairman John Reeve.  Mr Reeve stands down as Chief Executive of Family Investments at the end of October, after more than thirty years service.

Mark Goodale was previously Vice-Chairman of the AFM and has been Chief Executive of Reliance Mutual since July 2006, where he has led the Society’s strategy to grow its membership through a mix of providing specialist products to customer niches and acquisitions of selected portfolios of life and pensions policies from other insurers, particularly fellow mutuals and friendly societies.

Mark Goodale, Chairman of the Association of Financial Mutuals commented:“I’m delighted to become the latest Chairman of AFM.  Over the last few years, the media spotlight has regularly focused on the failings of some of our largest financial PLCs and there is a growing consensus that big business needs to operate more transparently and responsibly to rebuild consumer trust. During this time, mutuals have quietly continued to work closely with their customers to provide a better experience of financial services.  This is an important time for financial mutuals that look after the needs of 20 million people and offer a real alternative to the PLCs. With the support of government and with appropriate regulation, the financial mutual sector can do so much to restore public confidence in our industry.”

Phil Loney was appointed to the Board of Royal London Group on 3 October 2011, coinciding with his appointment as Group Chief Executive of Royal London Group. He previously spent eight years at Lloyds Banking Group, most recently as Managing Director, Life, Pensions and Investments.

Commenting on his appointment, Phil said: "I am very pleased to have been appointed Vice-chair of AFM.  As a relative newcomer to the AFM Board, I have been impressed by the enthusiasm and single-mindedness with which AFM works for a successful mutual insurance sector.  AFM represents a diverse group of mutual insurers but I believe that there is a single unifying factor at work - the desire to deliver a better deal for members of mutuals.   I look forward to working with the new Chairman and the other members of the Board to influence the market environment to make this happen."