New law tabled in Parliamentto help protect mutuals from being sold off to predators after LV debacle
A new law to help protect mutuals from being sold off to predators has been tabled in Parliament.
Following the disastrous attempt to sell insurer LV to private equity firm Bain Capital last year, MPs are drawing up plans to help safeguard mutually owned businesses.
The move by MPs comes after a successful campaign by The Mail on Sunday to stop the sale. Since then, more than 1,000 readers have contacted the newspaper to call for a vote of no-confidence in LV’s chief executive, Mark Hartigan.
Writing on the wall: Following the disastrous attempt to sell insurer LV to private equity firm Bain Capital last year, MPs are drawing up plans to help safeguard mutually owned businesses
Just 500 confirmed members would be needed to call a special general meeting to oust Hartigan.
The ex-colonel angered policyholders last year when, with then-chairman Alan Cook, he pushed for LV to be sold to Bain, shattering LV’s treasured mutual status, which means it is owned by its customers.
Many households buy banking or insurance products from mutuals because they are run for customers’ benefit, rather than to be a cash cow for profit-seeking investors.
MPs are looking to change the law so executives such as Hartigan will no longer be able to use a business’s need for money, genuine or not, as an excuse to sell it to a profit-hungry investor.
Currently, mutuals such as LV cannot raise capital from an investor without giving up their member-owned status. Labour MP Sir Mark Hendrick has tabled the private member’s Co-operatives, Mutuals and Friendly Societies Bill.
Another Labour MP, Gareth Thomas, who leads the all-party group on mutuals, said: ‘This could give mutuals like LV a huge boost, safeguarding them from ever being sold off unnecessarily and helping them to raise the capital to improve services and fund expansion.’
A Tory MP added: ‘The need to raise capital was a fig leaf for a contrived, back-door sale that seemed to serve the interest of management, not members. But many mutuals struggle due to needless, complex rules in capital-raising.’
Mutuality was a key principle for LV, founded in 1843 as Liverpool Victoria, to help the poor of Liverpool pay for a decent burial.
LV said: ‘We are supportive of anything that helps mutuals raise capital.’