Members of iconic UK insurance mutual LV= – better known as Liverpool Victoria – has prompted MPs and peers to call for better legal protection for the sector.
Members are due to vote tomorrow (10 December) on the sale of the business to US private investor Bain Capital. The move, which would lead to the demutualisation of LV=, has prompted criticism from across the political spectrum and in the press and a scathing report from the All Party Parliamentary Group on Mutuals.
The case has also exposed long-standing concerns over the status of mutuals in the UK, and this week more than 100 MPs and peers from across the political spectrum signed a letter to the Treasury calling for a review of the law that would allow the sector “to compete on equal terms as companies in capital markets”.
Labour / Co-op MP Gareth Thomas, chair of the APPG on Mutuals, said the letter calls for “removing the incentives for unnecessary demutualisations; strengthening the rights of member owners during demutualisation; allowing mutuals to compete on equal terms as companies in capital markets; establishing a duty on regulators to protect the interests of owners of mutuals; reforming the independent expert rules.”
Meanwhile, two members of LV= mutual have instructed solicitors with their concerns over its conduct in its proposed sale and demutualisation.
The members – one a with-profits policy holder since January 2002 and the other a non-profit policyholder since 2011 – have contacted solicitor Leigh Day with concerns over “a material lack of procedural fairness“ and “incomplete and/or contradictory information…made available to members“.
Leigh Day has written to the Financial Conduct Authority(FCA) to suggest a conference with the regulator alongside the two members and their instructed counsel. LV= has been copied into the letter, and contacted separately with notice of the action and a request for information.
The members are concerned over an alleged “failure to consult over the vote participation threshold”, with a change in 2019 away from a requirement that 50% of all members are needed to vote on any resolution which would demutualise LV=.
They are also concerned over “contradictory and confusing information published about the financial position of LV=”, citing media interviews which present the sale as “akin to a ‘rescue’ by Bain”. The letter gives examples including an interview with LV= CEO Mark Hartigan on Sky News on 22 November, where he stated that the Bain deal is “the only deal that keeps us going as a future business” and “the only deal that supports our jobs.”
In a statement, LV= said it was “aware of our responsibility to communicate clearly with members and, in addition to the extensive information around the transaction publicly available on our website, have directly responded to a significant number of written questions.”
An FCA spokesperson said its role is to make sure “customers are treated fairly and that there is no material adverse impact on them should the transaction go ahead,” adding: “We have challenged the firm to make sure this happens.”