UK politicians have slammed plans surrounding the demutualisation and sale of LV= to private equity firm Bain Capital.
The All-Party Parliamentary Group for Mutuals (APPG) released a report on 7 April saying the deal reached in December 2020 has been “rushed” and that LV= has not been “open and transparent” with its members about its intentions.
The APPG, which has over 100 members from both houses of parliament, found that the planned demutualisation “damages the diversity of financial services providers in the UK and weakens the mutual sector unnecessarily”.
It also said that the “leadership at LV= has not been open and transparent with the members about its intentions for the company” and it is “very difficult for an individual member of LV= to be able to assess whether the demutualisation proposal is in their interests or not”.
The report added: “The fact that the board will move ahead to conclude a deal with Bain Capital in advance of providing any meaningful information to its membership shows a disregard for the interest of members and a cavalier attitude towards the member governance of this business.
“Regulatory authorities do not appear to have so far acted fully in the interests of members, consumers and the wider economy.”
Gareth Thomas, APPG chair, said: “What’s clear from the group’s findings is that this demutualisation, like those before it, appears to be wholly unnecessary.
“We know from past experience that demutualisation is bad for members, customers and for the economy more widely.
“LV=’s planned sale to Bain Capital appears to be following the same pattern. The report finds that LV= has been unclear in its communication to members about its commitment to mutuality, the future business plan and the need for capital.
“At the very least LV= should now engage directly with members to explain the rationale for demutualising.”