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.

13 December 2011

Association of Financial Mutuals welcomes a number of new members

We are pleased to announce that CUNA Mutual and the Veterinary Defence Society have become Full Members of AFM.

In addition, we are pleased to be joined by new Associate members: Frontier Investment Management, J.P. Morgan, Littlejohn LLP and Norton Rose.

This brings total membership of AFM to 56 full members and 32 Associate members.

29 November 2011

Martin Shaw, Chief Executive of the Association of Financial Mutuals, comments on the 2011 Autumn Statement:

"The Autumn statement sounded in many ways like an emergency budget- with a series of actions introduced to address an economic position that has clearly deteriorated markedly over the last few months.


"We welcome some of the strong language about fostering UK industry, and members of AFM are keen to explore with the Treasury how insurer funds might be made available to help support infrastructure projects and help for smaller firms. It is important that mutual insurers are represented in the Insurers’ Infrastructure Investment Forum that the Government is creating with the Association of British Insurers. This after all is the basis by which mutuals were first created in the eighteenth and nineteenth century.  It also reinforces ideas we’ve presented to the Chancellor over the last few years.


"Many AFM members are themselves small businesses, so some of the rate and tax reliefs announced will be positive for companies, as well as for their self-employed customers.  However, for a government with a stated commitment to “foster diversity and strengthen mutuals, there remains nothing in the government’s planning to remove some of the barriers to the future success of the mutual insurance sector.  And more broadly, with the statement providing a raft of new spending initiatives, the devil may yet be in the detail, as some of the fiscal balances needed are still to emerge."

17 November 2011

Commenting on the Government’s announcement today that Northern Rock has been sold to Virgin Money, Martin Shaw, Chief Executive of the Association of Financial Mutuals stated:


“The Chancellor’s announcement today that Northern Rock will be returned to the private sector reflects the advice given to him by UKFI.  In their view, the government’s priority was to get the best cash terms on offer now.  It remains to be seen in the long-run whether this is the best deal for the customers of Northern Rock and indeed the economy, particularly of the North East – the 2008 banking crisis provided clear evidence that financial stability and competition for banking services may not be served by yet another me-too bank. 


 It is disappointing that UKFI does not appear to have fully explored the option of remutualisation of Northern Rock – we believe that long term that was a better deal.  We call on UKFI to issue a full report on the appraisal of options including the pros and cons of returning Northern Rock to the mutual sector.” 

10 November 2011

Commenting on the FSA’s consultation paper on implementation of the Solvency II Directive, Martin Shaw, Chief Executive of the Association of Financial Mutuals stated:


“We welcome the publication today of the FSA’s consultation on transposition of Solvency II into the FSA rulebook. Whilst full implementation of the directive is being delayed it is vital for the industry to have clarity now on what the rules will look like in the future.


“Solvency II provides a comprehensive approach to capital management across Europe, and its role in promoting financial stability and consumer protection is a vital part of retaining confidence in the European insurance sector.


“The FSA’s estimation of £1.9 billion in implementation costs for the UK insurance industry demonstrates the financial onus on the sector in order to be compliant when the directive is transposed into UK law. Not only do insurers of differing sizes have to contend with these up front costs, but the ongoing compliance bill will be in the region of £200 million per year. In mutual insurers, of course, those costs are borne directly by consumers and £1.9 billion equates to at least £10 for every policy.


“This makes for concerning reading, particularly given the broad range of other regulatory projects insurers have to cope with at present.  Small mutuals in particular will bear a disproportionately higher cost as many of the costs are not scalable, and they have a smaller customer base to share the costs over.


“FSA’s analysis also indicates that whilst capital holdings in aggregate are sufficient, around 20% of UK insurers face a shortfall of £12.5 billion.  We expect that the true amount of the shortfall will be much lower by the time Solvency II goes live, as insurers act to retain profits and change their business structure to reduce the amount of capital required.  We might also see an increase in strategic action, including disposals of back books and further consolidation.” 

05 November 2011

Comment on Government and FSA responses to the Treasury Select Committee’s report on the RDR 

Commenting on the Government and FSA responses to the Treasury Select Committee’s report on the RDR, Martin Shaw, Chief Executive of the Association of Financial Mutuals, stated:


“It's good to see that the Government has acknowledged the confusion over how much VAT will be payable as a result of the RDR’s implementation; we hope to see further clarification on this soon and we welcome HMRC’s intention to meet with the industry.


“Considering the overarching objective of the RDR is to increase both the quality of advice delivered and the transparency around paying for it, it is crucial for the industry to understand what the regulator envisages a 'low cost simplified advice' regime will look like for consumers and that they consult properly with the industry in order to achieve the best possible outcome for consumers.


“It is right that the Government has not agreed to the twelve month delay the TSC report recommended. At a time of regulatory change, the industry needs as much certainty as possible and preparations for the RDR’s implementation are well underway. The FSA needs to move ahead quickly now to ensure the regulation is in good shape upon implementation.” 

09 September 2011

Mutual helps reunite family fortunes on prime time TV


Missing Millions: ITV1: 8pm, Tuesday 13 September

Engage Mutual has been working with a team of TV researchers and genealogists to track down recipients of unclaimed funds it holds on behalf of customers or their beneficiaries.

Some of its heart warming stories, featuring unexpected windfalls, will be aired on ITV1’s prime time 8pm slot, with the first of four episodes starting next Tuesday (13 September).

Engage Mutual has been running its initiative to track and trace the owners of unclaimed funds for nearly two years and has so far reunited more than £1.5m.


Steve Barry, director of operations at the mutual, commented:

“Working with a TV production company, alongside our existing track and trace programme, proved to be a great opportunity to solve some of the particularly challenging cases relating to the unclaimed funds we hold.”

The problem of unclaimed money is widespread, with an estimated £15bn-£20bn lying in UK financial institutions.

Steve continued:

“Tracing the owners of unclaimed funds is invariably a time consuming and often complicated process, and clearly, it would be preferable that money stays permanently connected to its rightful owners.”

The mutual is introducing an awareness initiative and checklist to help customers avoid losing touch with their financial affairs.

Quite simple oversights, such as forgetting to update a change of address, can result in sums of money that were intended for a particular purpose, lying forgotten, or unknown, and consequently unclaimed.    

Visit details.

12 October 2011

Rating agency downgrade

The decision by Moody's to downgrade the credit rating of a number of banks and building societies wasinevitable whenthe Government made it clear earlier this year that deposit-takers should not be seen simply as 'too big to fail'.  So this movereflects a catching up by the agency rather than a change in the creditworthiness of the institutions. That said, it was not too long ago that Dexia from Belgium passed its stress testing with flying colours, yetit is now in the process of seeking a further bail-out.


"Investors should not be worried- and as long as they avoid holding more than £85,000 in any bank or building society, their deposits are safe." 

17 August 2011

Educating to save as well as saving to educate

Urgent and significant attention needs to be given to those saving for further education according to Martin Shaw, Chief Executive of the Association of Financial Mutuals:

“With the introduction of new tuition fees it has never been more important for parents to start planning towards meeting the cost of education.  However, what children need today, just as much as saving to educate, is educating to save. This point is made more prescient with the recent research from the Personal Finance Education Group showing that over half of all teenagers are in debt by the age of 17.

“Additional student loans will only exacerbate this issue unless there is a plan in place from an early age especially as students starting University in 2012 could leave with debts as high as £50,000*. For example, if the parents of a student starting university this year had put aside £50 a month from birth, they would have accumulated over £20,000 in savings.  Most importantly, they would have helped to demonstrate the value of financial planning and responsibility.

“There are many options open to parents looking to save a regular sum for the long term.  Many friendly societies offer Tax Exempt Savings Plans, and from November this year it will be possible to open a Junior ISA to help fund a child’s education.”

18 July 2011

AFM responds to report by Treasury Select Committee on the Retail Distribution Review

The Treasury Select Committee (TSC) has concluded in its report that the implementation of the Retail Distribution Review (RDR) should be delayed by 12 months.

In the Association of Financial Mutual’s submission to the TSC in January, we argued that without urgent and significant attention the review could not be “effectively delivered by 31 December 2012”.  We have not seen that greater urgency emerge, and as product providers with no shortage of willingness to engage with the Financial Services Authority, we remain very concerned that so much of the detail needed to implement the RDR is still awaited.  Meanwhile, it is quite possible that much of the RDR will be superseded within 12 months by new European regulation.

If the Committee wanted corroborating evidence for a delay it should look no further to the announcement on Friday from Cooperative Financial Services that in anticipation of the RDR it is seeking to offload its life business and make 670 advisers redundant.  We conclude therefore that the call for a delay is welcome and that FSA should carefully consider whether it is better to implement such seismic changes quickly, or properly.

18 July 2011

AFM welcomes MPs' call on government to promote financial mutuals

The Association of Financial Mutuals welcomes the report issued today by the All-Party Group on Financial Mutuals, following their Short Inquiry into Corporate Diversity in Financial Services.

The report helpfully assesses how well the government and the Financial Services Authority deliver on the coalition agreement commitment to “foster diversity and strengthen mutuals”.  For the government the prognosis is, could do better, whilst there is real concern that the regulator has failed to recognise the virtues of the mutual business model and has increasingly made it more difficult for mutuals to compete on equal terms. 

We have though begun to see the FSA talk more enthusiastically about better recognising the needs of the mutual sector of late, and we are very grateful to the Members of Parliament that make up the All-Party Group for their help in enlightening Hector Sants and colleagues.

In particular we hope that the Government heeds the report, and takes it as an opportunity to develop a clear strategy to support the mutual sector in a meaningful way.  All the evidence in this report and more widely shows that the corporate business model is by no means perfect, and the misaligned priorities of managers in shareholder owned companies was at the heart of the financial crisis.  That should be reason enough for government to seek mutual solutions to key strategy issues, and we are very keen to have further dialogue with Treasury about the ways that mutual insurers and friendly societies can help deliver government policy.