MPs urge Rishi Sunak to protect firms like LV from private equity sharks
- A hundred cross-party MPs and peers call on Chancellor to strengthen the laws
- They want friendly societies and mutuals to be less vulnerable to buyouts
- Move comes in wake of LV’s controversial £530million takeover by Bain Capital
Rishi Sunak was last night urged to protect mutuals in the wake of the private equity takeover of LV.
A group of 100 cross-party MPs and peers has called on the Chancellor to strengthen the laws governing friendly societies and mutuals to make them less vulnerable to buyouts.
It comes in the wake of LV’s controversial £530million takeover by Bain Capital that will see it stripped of its mutual status and run by profit-hungry investors. The deal, to be voted on this Friday, would hand LV’s 1.2million members a mere £100 each.
A letter signed by MPs and Lords including Tories Steve Baker, David Davis and Baroness Altmann and Labour’s Anneliese Dodds said the sale of the 178-year-old group had generated ‘considerable public concern as well as significant cross- party unease in Parliament’.
Chancellor Rishi Sunak has been urged to protect mutuals in the wake of LV takeover
They added: ‘We the undersigned urge you to establish urgently a formal review of the law governing friendly societies and other mutuals.’
Key demands include a reform of the rules on who can act as an ‘independent expert’ – people appointed by the mutual to review a possible deal and how it would affect policyholders and members. The sale was criticised when it emerged one of LV’s ‘independent’ experts, Simon Grout, worked at FTI Consulting – the same firm acting as LV’s public relations adviser.
The politicians also want changes to the way mutuals can raise money, to enable them to ‘compete on equal terms’ with other firms – one reason given for the sale was that LV could not raise funds to invest because of restrictions linked to a cap on debt.
The all-party parliamentary group for mutuals launched an inquiry soon after the deal was first announced in October 2020, and chairman Gareth Thomas said the fact politicians from across the political spectrum are demanding change ‘shows we must not let a saga like the botched sale of LV unfold again’.
The Labour MP added: ‘The more-than 100 parliamentarians who signed this letter speaks volumes about the level of dismay with which we have watched the deal unfold.
‘While we all hope members vote down the dreadful deal and save LV from private equity sharks, we are also looking ahead to ensure no more beloved British mutuals meet the same fate.’
LV was set up to help working-class families in Liverpool avoid a pauper’s funeral.
Rival mutual Royal London has said it is ready to make a move on LV if the Bain deal is rejected.