Rishi Sunak, who was last night urged on behalf of mutuals to be protected in the wake the privatization of LV’s private equity tookover, was last night urged.
100 peers and MPs from across the political spectrum have asked the Chancellor to improve the laws that govern friendly societies, mutuals, and other similar organizations to lessen their vulnerability to buyouts.
It comes in the wake of LV’s controversial £530million takeover by Bain Capital that will see it stripped of its mutual status and run by profit-hungry investors. The deal, to be voted on this Friday, would hand LV’s 1.2million members a mere £100 each.
The sale of the 178 year-old group, which was signed by Tories Steve Baker and David Davis as well as Labour’s Anneliese Dssss, sparked a lot of concern among MPs and Lords.
Chancellor Rishi Sunder has been urged by the LV board to safeguard mutuals following the takeover.
The undersigned added, “We urge you to urgently review the law governing friendly society and other mutuals.”
Key demands include a reform of the rules on who can act as an ‘independent expert’ – people appointed by the mutual to review a possible deal and how it would affect policyholders and members. The sale was criticised when it emerged one of LV’s ‘independent’ experts, Simon Grout, worked at FTI Consulting – the same firm acting as LV’s public relations adviser.
The politicians also want changes to the way mutuals can raise money, to enable them to ‘compete on equal terms’ with other firms – one reason given for the sale was that LV could not raise funds to invest because of restrictions linked to a cap on debt.
Soon after the announcement of the mutual deal in October 2020 was made, the all-party parliamentary committee for mutuals began an inquiry. Chairman Gareth Thomas stated that the fact that politicians across political spectrum demand change’shows us we cannot let a saga such as the failed sale of LV continue’.
Labour MP said: “The fact that more than 100 members of parliament signed this letter is a testimony to the dismay we feel at the way the deal has been unfolded.”
“While we hope that members will reject the dreadful deal, and save LV’s from the private equity sharks’, we also look ahead to make sure no other beloved British mutuals suffer the same fate.
LV was created to save Liverpool’s working-class families from a poor funeral.
Rival mutual Royal London said that it was ready to move on LV if Bain’s deal is rejected.