The decision by LV= members to reject the proposed sale to Bain Capital is a major boost for mutuals everywhere.
Members voted to support their customer-focussed business purpose, and reject a transfer to profit-maximising private equity owners.
It’s a vote of confidence in mutual, equitable, business, and sends a warning to potential corporate raiders that mutual members will not submit meekly to their advances.
Mutuo is delighted at this outcome, having campaigned against the proposal for the whole of 2021. Its decision in January to propose an inquiry by the APPG for Mutuals into the demutualisation, ensured that proper scrutiny was assured.
Led by its Chair Gareth Thomas MP, the Group exposed the weakness of the case put forward by the Board of LV=, which would have seen the 178 year old mutual asset stripped by private equity.
The persistent campaigning by Daily Mail business journalists Archie Mitchell and Lucy White was supported by media from across the spectrum. The only comments in favour of the deal came from people bought and paid for by management, using members’ money, of course. Otherwise, the criticism was unanimous. It was a rotten deal.
This whole affair has exposed the weakness of the legal and regulatory framework governing mutuals. Government, which has sat on the fence throughout this affair, must now act.
- Mutuals need to be able to raise investment capital without demutualising. Treasury should fully enact existing legislation without delay.
- The process of regulating demutualisation proposals also needs to be overhauled, so that members’ interests can be fully respected.
- Incentives to demutualise also need to be removed. As long as there are unprotected legacy assets, there will be people determined to loot them who did not invest or contribute to them in any way. The law must step in now to ensure that they are preserved for the purpose they were intended.
Mutuo will now pursue this reform agenda with vigour. If you agree with us, come and help.