AFM responds to chancellor’s mansion house speech
14 November 2024
Responding to the Chancellor’s Mansion House speech, Andrew Whyte, Chief Executive of the Association of Financial Mutuals, commented:
“The measures the Chancellor has announced in the Mansion House speech to support the growth of the mutual and co-operative economy are important first steps towards achieving the Government’s aspiration of doubling the size of the sector.
“It is great to see the Chancellor’s recognition of the vital and distinctive contribution that mutuals make to inclusive economic growth across the UK. We know that with the right support from Government we can do so much more. By putting our members at the heart of everything we do we offer consumers genuine choice, serve the underserved, build financial resilience and invest in our communities.
“The new Mutuals and Co-operative Council will play a key role, and we look forward to working together to achieve our shared ambitions.”
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Co-operatives UK launch their Co-operative and Mutual Economy 2024 report
This report sets baselines for the government’s ambitious manifesto commitment to double the size of the sector.
The report reveals that 9,342 co-operatives and mutuals have produced a record, combined income of £165.7 billion and employ over 1.3 million people!
Can Coops and government work together to meet the ‘doubling’ challenge – and drive inclusive growth and business resilience in the process?
Read the full report here
A partnership to put mutual and co-operative businesses at the centre of the new Government’s plans for growth
05 July 2024
The mutual and co-operative trade bodies look forward to working together with the new Government to deliver the Labour Party manifesto commitment to double the size of the mutual and co-operative sector. They want to work with the new Government to create a meaningful covenant between mutuals and co-operatives, Government and society, based on the purpose-driven business model that delivers real benefits to our communities and wider society.
The chief executives of the mutual trade bodies Co-operatives UK, The Association of Financial Mutuals, the Building Societies Association and ABCUL, have written to Sir Keir Starmer offering the support of the sector to help deliver growth and sustainable benefits to wider society.
The letter invites the Prime Minister to work with them to:
- Create an environment that places mutuals and co-operatives at the heart of his Government’s policy thinking and economic strategy, supporting the growth of the mutual sector
- Deliver a legislative and regulatory framework that enables mutuals and co-operatives to meet the needs of the communities they serve and compete fairly with other businesses
- Unlock new capital raising options for new and growing mutuals and co-operatives
This continues to build on the ambitions outlined in the joint Prospectus, which was launched in November 2023. It highlights the value which mutuals and cooperatives, with over 74 million memberships across the UK, provide. It demonstrates the inherent link between people, including the workers and customers, having a ‘stake and a say’ in the business and the outcomes that business produces.
The trade bodies and their member businesses stand ready to partner with the new Government to deliver growth that benefits our communities, our society, and our country.
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To see the text of the letter click here
13 June 2024
Responding to the publication of the Labour Party Manifesto today, Andrew Whyte, Chief Executive of the Association of Financial Mutuals said:
“The Labour Party’s manifesto commitment to double the size of the co-operative and mutual sector is a welcome recognition of the sector’s huge potential to contribute to a diverse, inclusive and growing economy.
“Over the last few months, together with our partners, the Association of British Credit Unions, the Building Societies Association, and Co-operatives UK, the Association of Financial Mutuals have been calling on all political parties to put mutuals and co-operatives at the heart of a future government’s economic policy and strategy.[1]
“With right policy and regulatory environment, the mutual and co-operative sector can be an engine for growth across the country and contribute even more to the economy, our communities and society as a whole. We look forward to working with whoever forms the next Government to achieve that aim.”
[1] The Purpose of Mutual and Co-operative Business in Society
The mutual and co-operative sector calls on party leaders to put co-operatives and mutuals at the centre of their plans for growth
10 June 2024
The chief executives of mutual trade bodies, including Co-operatives UK, The Association of Financial Mutuals, the Building Societies Association and ABCUL, have written to the main party leaders, calling for a meaningful covenant between mutuals and co-operatives, Government and society, based on the purpose-driven business model that delivers tangible benefits to our communities and wider society.
Specifically, the letter calls for the next Government to commit to:
- Appointing a Minister for Mutuals & Co-operatives
- Establishing a British Business Bank fund for to new and existing mutuals and co-operatives
- Reviewing the case for mutualising the Post Office
- Delivering the recommendations of the Law Commission reviews
This builds on the work that the sector has already done in preparing a joint Prospectus which outlines the asks in further details and a series of policy roundtables which have taken place across the UK over the last 12 months.
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Press contacts:
Sian Bradshaw
Senior Consultant, H/Advisors Cicero
[email protected]
+447728382373
Notes to Editors:
- The Purpose of Mutual and Co-operative Businesses in Society Prospectus can be found here.
- Policy roundtables were held in Cardiff, Edinburgh, London and Manchester between January and May 2024. They convened influential and supportive politicians and influencers to agree what mutual have to offer and how to ensure this potential is harnessed by the next government.
- The mutuals and co-operative trade associations are: Association of British Credit Unions (ABCUL); Association of Financial Mutuals (AFM); Building Societies Assocation (BSA); Co-operatives UK (Co-op UK) and the National Liaison Group (NLG).
- ABCUL is the leading trade association for the credit union sector across Great Britain serving over 151 individual credit unions of all shapes and asset sizes. ABCUL members account for more than 61% of the total volume of credit unions in Great Britain with over £1bn of total assets in membership.
- The Association of Financial Mutuals is the trade body that represents mutual and not-for-profit insurers, friendly societies and other financial mutuals across the UK. The AFM is committed to protecting and progressing the principles of mutuality and promoting a better understanding of mutuals, encouraging mutual support and mutual approaches to business and public policy.
- The Building Societies Association represents all 42 building societies, as well as 7 of the larger credit unions. Building societies serve around 26 million consumers across the UK and have total assets of over £515 billion. Together with their subsidiaries, they are helping 3.5 million families and individuals to buy a home with mortgages totalling over £385 billion, representing 24% of total mortgage balances outstanding in the UK. They are also helping over 23 million people build their financial resilience, holding over £385 billion of retail savings, accounting for 19% of all cash savings in the UK. Within this, societies account for 40% of all cash ISA balances. With all of their headquarters outside London, building societies employ around 51,500 full and part-time staff. In addition to digital services, they operate through approximately 1,300 branches, holding a rising share of financial services branches in local communities.
- Co-operatives UK is the voice for the UK’s thousands of independent co ops. It supports co ops to start up and thrive and offers access expert advice, events and training.
- The National Liaison Group is a collaboration of the UK Credit Union Trade Bodies and Representatives who come together to engage with government, regulators and other stakeholders to support change and create an environment that facilitates ongoing growth and resilience of the credit union sector.
17 April 2024
MUTUAL INCOME PROTECTION PROVIDERS EXCEL IN 2023
Paying out £70 million in claims in 2023, and rapidly growing new business –
Members of the Association of Financial Mutuals (AFM) that offer income protection products now account for around 60% of claims on individual income protection products (i.e. excluding group business), and whilst they currently hold 15% of policies, that commitment to paying claims is leading to strong demand for mutual products.
In 2023 AFM members paid out over £70 million in claims in 2023, to 7,000 customers. This compares to £52 million in claims in 2022. Part of the increase recognises that Wesleyan Assurance re-joined AFM in 2023. On a like-for-like basis, the amount paid out in 2023 was 6% higher than in 2022.
The most common form of claim was musculoskeletal (38% of all claims). Whilst these claims were also the most frequent in previous years, the rate of increase is significant.
There was also a sharp increase in the number of claims relating to mental health, rising to 11% in 2023 compared to 8% in 2022. This coincides with a new report from the Centre for Mental Health, which indicated that the economic and social costs of mental health rose to £300 billion in 2022. Around 90% of mental health claims are for stress, anxiety and depression, though claims for PTSD and eating disorders were most costly, averaging £56,000 per claim.
The average duration of claims in 2023 for income protection policies was 68 weeks, though nearly a quarter of claims have been running for over five years. This illustrates the vital support that income protection can provide. Whilst the number of people who need to claim is modest, the benefits to those that do can be immeasurable, as income protection allows families to maintain their standard of living during a protracted illness and not rely solely on state benefits. The average value for each claim was just over £10,000. In addition, AFM members also intervene to help claimants recover, and undertook rehabilitation with nearly 600 people in the year.
The proportion of claims approved was 92.1%, up from 91.6% the previous year. The main reasons for claims to be declined were those where key information was not disclosed at the point of application or claim (54%), with a further 26% not paid because the claim did not meet the definition of disability.
Andrew Whyte, Chief Executive of AFM added:
“According to the FCA’s Financial Lives survey, 6.1% of the population hold an income protection policy[1]. AFM members are becoming an increasingly important part of the market, managing around 400,000 policies at the end of 2023, just under 15% of the market, but they accounted for over 60% of all claims paid to individuals.
“We expect the mutual influence to continue to grow: in 2023 ABI reported total sales of income protection of 247,000[2], with 57,000 new policies (or 22% of the total) sold by AFM members. Affordable premiums and a greater likelihood of paying a claim are key reasons in the growth of the mutual market.”
[1] https://www.fca.org.uk/publication/financial-lives/fls-2022-general-insurance-protection.pdf
[2] https://www.abi.org.uk/news/news-articles/2024/3/record-number-take-out-income-protection-insurance/
Ann-Marie O’Dea appointed as Chair of Association of Financial Mutuals
1 March 2024
The Association of Financial Mutuals has appointed Ann-Marie O’Dea, Chief Executive of Shepherds Friendly, as Chair of the AFM Board.
Previously Vice-Chair of the Board, Ann-Marie replaces Stuart Tragheim, who has stood down following his retirement from Holloway Friendly Society where he was Chief Executive.
Ann-Marie said “I am delighted to be taking over as Chair of the AFM Board. I am passionate about mutuality, about the benefits it can bring to consumers and its place in today’s market.
“We have an exciting agenda ahead of us, including making the case for mutuality in the run up to the General Election at the same time looking for opportunities for AFM Member firms to work together to improve the services and value we offer our members. We will also continue to help Members navigate the complex regulatory environment while pressing the PRA and FCA for more proportionate regulation for our sector.
“But I have a tough act to follow. Stuart has been a terrific Chair of the AFM and led the Board with energy and focus. Along with the rest of the Board, I want to thank Stuart for the great contribution he has made to the AFM over the years and wish him all the very best for the future.
“I am also looking forward to working with Andy Morris, Chief Executive of Cirencester Friendly, in his new role as Vice-Chair of the AFM Board.”
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The full list of AFM Board members is listed on the AFM website: Board Members – Association of Financial Mutuals
For more information contact: Andrew Whyte, Chief Executive, AFM: [email protected] or 07703 107613
The mutual and co-operative sector is calling on the next government to back business with purpose beyond profit.
30 November 2023
Trade bodies ABCUL, AFM, BSA and Co-operatives UK have come together to publish a joint prospectus ahead of the next General Election, outlining how co-operatives and mutuals can help the next government tackle the biggest challenges: economic stagnation, inequality and insecurity, and the climate emergency.
Mutual and co-operative businesses make a significant contribution to the UK economy, with combined annual revenues of £87.9 billion, equating to 3.5% of UK GDP.
By offering a competitive alternative to shareholder-owned businesses, they are essential for the UK to build an inclusive, growing and diverse economy. They also provide greater consumer choice while delivering ‘mutual value’ to their members and wider society.
However, their different legal and regulatory frameworks prevent mutuals from competing on a level playing field with their competitors.
The mutual and co-operative sector is therefore calling on the next Government to create a meaningful covenant between mutuals and co-operatives, Government and society, based on the purpose-driven business model that delivers tangible benefits to our communities and wider society.
The joint prospectus sets out the action needed by the next Government:
- Create an environment that places mutuals and co-operatives at the heart of economic strategy, supporting the growth of the mutual sector
- Deliver a legislative and regulatory framework that enables mutuals and co-operatives to meet the needs of the communities they serve and compete fairly with other businesses
- Create and preserve capital to support new and growing mutuals and co-operatives
You can read the joint prospectus here: The Purpose of Mutual and Co-operative Business in Society
A series of parliamentary events will be held across the UK in the new year to engage, face-to-face, with politicians from all parties. The aim is to build understanding of the value mutual organisations bring to the economy, and to garner support for the actions required to maintain that mutual value.
– Ends –
For more information contact: Andrew Whyte, Chief Executive, AFM: [email protected] or 07703 107613
Wesleyan joins the Association of Financial Mutuals
August 2023
Wesleyan, the Birmingham-based financial services mutual is the latest member to join the Association of Financial Mutuals (AFM). The AFM is the trade body that represents mutual and not-for-profit insurers, friendly societies and other financial mutuals across the UK.
Wesleyan has been providing specialist financial advice and solutions for doctors, dentists and teachers for over 180 years and has more than £7 billion assets under management. It becomes the AFM’s 47th member.
Mario Mazzocchi, Wesleyan Group Chief Executive said: “Now more than ever, in these challenging economic times, it is important that the mutual sector remains focused on its members. At Wesleyan, we are incredibly proud of our mutuality and believe the model offers members financial confidence, diversity of choice and alternative options for investors.
“Mutuals play an important role in today’s society and we welcome the successful passage of the Co-operatives, Mutuals and Friendly Societies Bill through the House of Lords and the more recent news that the Law Commission will carry out a review of the Friendly Societies Act 1992. At last we are seeing a focus on modernising our sector, enabling Mutuals and Friendly Societies to continue to flourish and support important growth for the UK.
“We look forward to adding our voice to the fantastic work the AFM is already doing to raise the profile of mutuality across the UK.”
AFM Chair, Stuart Tragheim said: “I am delighted to welcome Wesleyan to AFM. Wesleyan’s profound commitment to mutuality, rooted in their proud history, will strengthen our collective voice and advocacy on behalf of the mutual sector.
“I look forward to working with Mario and the rest of his talented colleagues across Wesleyan as we work together to strengthen our sector, improving the services we offer our members and making the case for the distinctive contribution that mutuals make to the economy and society as a whole. A contribution which is all the more vital in these challenging times.”
AFM welcomes a key moment in much-needed reform of Friendly Societies legislation
20 June 2023
The Association of Financial Mutuals (AFM) welcomes the announcement that the Law Commission will carry out a review of Friendly Societies Act 1992 in coming months.
The AFM has been campaigning for years for a comprehensive reform of Friendly Societies legislation. The announcement of this review is an important first step in modernising the legal and regulatory framework for Friendly Societies, so that they can compete on more equal terms with other insurance companies, and continue to serve the best interests of their members and to deliver superior outcomes.
The Government committed to asking the Law Commission to review the Friendly Societies Act during Parliamentary debates about the Co-operatives, Mutuals and Friendly Societies Bill, a Private Members Bill introduced by Sir Mark Hendrick MP last year. The Bill has highlighted the strong commitment from parliamentarians across all parties for the mutual and cooperative sector, and was given a Third Reading and completed its progress through the House of Lords on Friday 16 June and is now awaiting Royal Assent.
Andrew Whyte, AFM Chief Executive, said:
“The Law Commission review of the Friendly Societies Act is long-overdue. The world has changed beyond recognition since the Act was introduced more than 30 years ago, and this has contributed to a sharp decline in the number of active societies. Taken together with the successful passage of the Co-operatives, Mutuals and Friendly Societies Bill through the House of Lords, this represents a key moment in our long-standing campaign for reform. But it is only a start, and we look forward to working with the Law Commission to develop a modern, relevant and proportionate legal and regulatory framework which will enable Friendly Societies to continue to thrive and grow.”
– Ends –
For more information contact: Andrew Whyte, Chief Executive, AFM: [email protected] or 07703 107613
Notes to Editors.
- The Law Commission Review was announced by Andrew Griffith MP, Economic Secretary to the Treasury in a written Ministerial Statement on Monday 19 June: Written statements – Written questions, answers and statements – UK Parliament and by the Law Commission itself on Friday 16 June 2023: Law Commission invited to review legislation on co-operatives and friendly societies – Law Commission.
- For more details about the Co-operatives Mutuals and Friendly Societies Bill see the Parliament website: Co-operatives, Mutuals and Friendly Societies Bill – Parliamentary Bills – UK Parliament.
Mutual income protection providers paid out over £50 million in claims in 2022
April 2023
-Increases in the number of claims for aching joints, bones and muscles leads to higher claims payouts-
Members of the Association of Financial Mutuals (AFM) that offer income protection products paid out £52 million in claims in 2022, to over 9,000 customers.
This compares to £34 million in claims in 2021. Much of the increase reflects that LV= has since joined AFM and its results have expanded the value of claims paid:. Looking at the figures on a like-for-like basis, the amount paid out in 2022 is around 3% higher, whilst the number of claims fell 2%.
The most common form of claim was musculoskeletal (33% of all claims). Whilst these claims were also the most frequent in previous years, the rate of increase is significant, as demonstrated in the chart below.
In 2020, we speculated that the fall in musculoskeletal claims coincided with lockdown and the likelihood that people were spending less time travelling and at their desk; the rapid rise since indicates that this respite was temporary, and that changing lifestyles since the start of the pandemic, such as increased remote working and greater use of technology, have made us more vulnerable to problems with joints, bones and muscles.
Interestingly, the number of claims relating to mental health fell slightly, from 9% in 2021 to 8% in 2022. This is despite the HSE reporting that more than half of workplace-related ill-health cases are caused by stress, anxiety and depression[1], which reinforces the need for effective support for employees.
The vast majority of claims last a relatively short time (two-thirds last less than a year), but one in seven claims run for over five years. This illustrates the vital support that income protection can provide. Whilst the number of people who need to claim is modest, the benefits to those that do can be immeasurable. Families that would otherwise be forced to rely solely on State support, can maintain their standard of living during a protracted illness.
The proportion of claims approved was just under 92%, which was a little lower than the previous year (94%), but which still emphasises the commitment of the sector to pay all genuine claims. The main reasons for claims to be declined were those where key information was not disclosed at the point of application or claim (41%), and the claim had been made for an excluded condition or was outside the scope of the policy (39%).
Andrew Whyte, Chief Executive of AFM added:
“AFM members sold 50,000 new income protection policies in 2022. This, and increasing amounts paid out emphasise the growing importance people attach to ensuring their income is secured if they can’t work due to injury or illness. Whilst inflation and the cost of living remain high, having the capacity to pay the bills and look after the family finances has never been more important. Mutual income protection providers are at the forefront of paying claims and committed to providing the best possible service to their members.”
[1] https://www.hse.gov.uk/statistics/overall/hssh2122.pdf
John Lewis, and the perils of raising capital in a mutual
March 2023
Press reports in recent days that John Lewis is seeking external investment to fund its future strategy are yet another reminder of the challenges of being a mutually-owned organisation.
Mutuals, whether member-owned or employee-owned, still make up a significant part of the UK economy today. The best known, as well as John Lewis, are the Cooperative Group, Nationwide Building Society, and Royal London. Traditionally, mutuals like these have had to rely on retained profits to grow their capital base, as there are no external shareholders to call on to raise new funds. This may constrain their options to grow, and in turn this makes them vulnerable to competitor activity and to takeover.
Demutualisation has been the solution for many in the past, but the story of demutualised building societies and insurers in the past is a sorry one, with most businesses and their customers losing out. And this was the problem LV= recognised in 2021, which led it to an attempt to demutualise and to sell the business to private equity. That failed, because insufficient of its members supported the proposal, and LV= is now cutting its cloth, and rejuvenating itself as a member-focused organisation.
The challenge for John Lewis is made more acute by the woes of the High Street, where many of the department stores that once dominated have been washed away. John Lewis’ strategy, combining high street and online, with groceries and other business ventures, calls for a scale of capital support that it appears is not supportable internally.
Access to capital has been a long-held challenge for mutual businesses. Legislation was brought forward in 2015, for mutual insurers and friendly societies to create new forms of shareholding without diluting the ownership model, but the ‘Mutual Deferred Shares Act’ has been thwarted by dogmatic resistance in HMRC.
The perils for John Lewis are that on the one hand, a lack of new capital might ultimately undermine the business, and on the other, that new investors will seek to overtly influence the business model. Either of those outcomes will be bad for everyone that cherishes John Lewis and Waitrose, as important, purpose-led businesses.
John Lewis needs a proper capital solution that allows it to raise funds, and properly reward investors, without having to compromise its business model. The Government should not stand idly by and let another bastion of mutuality slip away.
