The Bank of England has revealed that it has held no meetings with representatives of the owner-members of LV= mutual over plans to sell and demutualise it.
But it has held 36 meetings with managers of LV= since it began to look into a sale, Bank governor Andrew Bailey said in a response to MPs and peers on the all-party group (APPG) for mutuals.
The APPG wrote to Mr Bailey in May with a series of questions about the bank’s inquiries into the proposed sale, and about the wider regulation of the mutual sector.
Chaired by Labour/Co-op MP Gareth Thomas, the APPG wants greater scrutiny of the planned sale of LV= to US private equity group Bain Capital.
In his letter, Mr Bailey told them that staff from the bank’s Prudential Regulatory Authority (PRA) division were informed about LV=’s interest in a sale last June, and had since met LV= more than 35 times. All those meetings “included some form of discussion of the proposed transaction”, but some were regular meetings with other subjects also under discussion.
He said the PRA had not met with policyholders “and do not do so as a general approach”. The bank is concerned only about the safety and soundness of any transaction and whether it secured a degree of protection to policyholders. The question of whether it was fair to policyholders was a matter for the Financial Conduct Authority, he added.
Mr Thomas said: “It is extraordinary that the PRA has managed to meet with the management of Liverpool Victoria over 35 times in under a year but not once with any of the consumer/owners. LV= members are at the mercy of rogue managers who assume all the rights of ownership with none of its responsibilities.”
“Following LV’s failure to consult and communicate with its consumer owners we might expect regulators to stand up for them rather than act as facilitators for the managers and board.”
Writing for Labour List last month, Mr Thomas said the demutualistion threat hanging over LV= “proof the City still needs reform” because “he law, as it stands, effectively incentivises the demutualisation of mutuals”.
“There is no evidence that demutualisation strengthens a business,” he added. “Virtually every other demutualisation of a financial mutual has soon led to it being taken over. Would the scale of the financial crash in Britain have been as bad if Northern Rock and Halifax had stayed as building societies?
“Would there be more competition in banking and other financial services if there were more building societies, more financial mutuals and slightly smaller big banks? These are questions that should be exercising minds in the Treasury and the Bank of England as the future of Liverpool Victoria lands on their desks.”
