Gareth Thomas MP, chair of the APPG for Mutuals, spoke in Parliament yesterday evening about the demutualisation of LV=.
He argued that in the case of LV=, there has never been “a clear, easy to understand, reason why demutualisation is needed. The business is well capitalised; indeed, it recently sold its general insurance business for over a billion pounds. It has raised significant sums on the capital markets. Both the chairman and chief executive argued the business was in very good financial shape up until their plans for putting Liverpool Victoria up for sale were leaked to the media…”
Mr Thomas also used the debate to emphasize how LV= members have been excluded from the process so far. He stressed that members have a right to know precisely why this sale to Bain Capital is happening, especially as the private equity firm has no experience in running a financial mutual.
Mr Thomas went on to mention how the conversion from a friendly society to a company limited by guarantee, and the decision to demutualise are intimately linked and should be understood as so by regulators. He remarked how “the failure to consider interlinked business decisions was a “fundamental failure identified by Dame Elizabeth Gloucester in her devastating report into the LC&F debacle.” The failure of regulators to see how these two events are connected “appears to be a clear repeat of that mistake.”
The APPG for Mutuals will continue working to ensure that LV= members are consulted on what is happening, and that corporate diversity is championed.