The Chancellor is facing calls to kick off an urgent review into the laws governing mutuals, as the failed sale of LV is set to cost members up to £43million.
Rishi Sunak did not intervene in Bain Capital’s proposed sale to private equity shark Bain Capital. However, the Treasury stated that it was an issue for members.
However, LV’s 1.2 million policyholders have rejected the deal. MPs want Sunak to reform the mutuals sector.
Pressure: Rishi sunak did not intervene in the proposal sale of LV and Bain Capital to private equity shark Bain Capital. However, the Treasury stated that the matter was for the members.
MPs would like to see member-owner rights strengthened and incentive for “unnecessary desmutualisations” removed.
The City regulators should be held responsible for protecting the mutual member’s interests and rules to facilitate mutual capital raising must also change.
Trust in LV bosses Alan Cook and Mark Hartigan (pictured) has hit rock-bottom
According to MPs, LV member were not protected by regulation because of the absence of mutual sector regulations.
It has also cost the members dear with independent experts employed by LV estimating that the firm’s 1.2m policyholders would end up forking out £43million to cover advisers’ fees and other costs associated with the deal.
It failed to win approval from sufficient members on Friday and it fell apart today. However, millions of pounds will remain in the savings account to help cover the cost of this unpopular deal.
Gareth Thomas is Labour’s MP and chaired the All-Party Parliamentary Group on Mutuals.
He plans to ask Treasury ministers what their plan is for the mutuals in Parliament.
LV was a mutual throughout its entire 178 year history. This means that it has always been owned and operated entirely by members.
Last year’s’strategic reviews’ were completed by Alan Cook, Mark Hartigan, the bosses of the firm. They believed that the best solution was to sell the business. They also claimed that LV had to raise cash in order to expand and modernise.
They plumped for Bain’s – but the proposed deal infuriated LV members, who were unsettled by the idea of a rapacious private equity firm looking after their savings.
Trust in Hartigan’s and Cook’s abilities to work together was at an all-time low. Cook, who lost Friday’s vote, agreed to resign when a “way forward” is reached.
Kevin Hollinrake Tory MP said, ‘It has all been a set-up from the beginning to finish. Cook and Hartigan didn’t share mutual experiences.