AFM Comments on the report of the APPG for Mutuals’

8 April, 2021

As a trade body supporting the mutual sector, the Association of Financial Mutuals is very grateful for the attention paid by the All-Party Parliamentary Group for Mutuals to the planned demutualisation of LV=.

The decision to demutualise is a one-time, irreversible one, and cannot be taken lightly.   The management of LV= has decided the business will be in a better position competitively under the protection of a private equity owner, Bain Capital.  However, it has yet to put the case to its members, who will ultimately decide on whether the deal goes ahead.
Over the last 30 years, demutualisations have seldom resulted in a happy outcome: customers generally get a worse deal as their interests become secondary to those of shareholders; management’s expectations of more capital, as well as greater independence in which to spend it, have tended to result more often in failed business plans and an early takeover.
The mutual sector continues to serve tens of millions of UK customers, and is as relevant and vital today as it has always been.  As consumers demand that financial services businesses manage their money more responsibly, and pay greater attention to the needs of society, the attraction of customer ownership is becoming ever more apparent.
We agree entirely with the APPG inquiry recommendations, that there is greater scrutiny of the proposed sale by parliament and by regulators, and that more attention is given to updating legislation, to enable the mutual sector to compete on equal terms.

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