Demutualisation of Liverpool Victoria — House of Commons, 2021-09-15
Topic: Domestic Commerce
Gareth Thomas (Labour, Centre-left): My hon. Friend will know that when we saw the last wave of building society demutualisations, there were large numbers of job losses. I gently warn those who work for Liverpool Victoria to be wary of any assurances they have been given about their jobs if the sale to Bain and the demutualisation go ahead After the financial crash, there was recognition across the House that the wave of demutualisations of building societies had been, at best, a dismal episode, that corporate diversity needed to be encouraged, and that financial mutuals in particular had a crucial role to play in maintaining competition and the interests of consumers. For the Government and this Minister in particular—I welcome him to his place, as I know he is diligent in his interest in the mutual sector—I hope that the demutualisation of Liverpool Victoria will be a further wake-up call to look more seriously at the needs of financial mutuals and specifically their ability to raise capital, and to put into law disincentives to demutualise. We need protections for legacy assets, and we need a review of how financial mutuals are regulated under the Financial Services Act 2012. Certainly representations we had from the Association of Financial Mutuals suggest an urgent review to modernise that Act is overdue I hope that the Minister will also ask the chief executive of the FCA to revisit the question of whether the owners of LV=—its consumers—were misled when the conversion to a company by guarantee took place This demutualisation is proof that we need again to celebrate and enhance the position of mutuals in our markets. After all—I say this gently and reluctantly—what is being proposed in the demutualisation of LV= is the looting of nearly two centuries of legacy assets. Of course, it is being dressed up as something different, but that is money built up from the working capital of the business over years of transactions, starting with small contributions from the working people who were the original members of the Liverpool Victoria Burial Society, who set the society up to avoid the Victorian scandal of a pauper’s funeral. Over time, those small contributions became a substantial sum, and they were augmented by the funds transferred into the friendly society from a series of mergers with other mutuals. In good faith, those other mutuals brought their assets to share with a broader membership for their common purpose Today, we have the spectacle of a demutualisation that looks to be driven by the simple desire to appropriate this money. None of the promoters of the demutualisation has made any contribution to the accumulation of the assets, yet they want to take advantage of them. It seems that the attraction of the assets means that the executives, the board members and the private equity players will do whatever is necessary to appropriate them. Token windfall payments to members in exchange for their vote will, just like in every other demutualisation, transfer the value from those who contributed and their descendants to those who did not. I gently suggest that that can never be fair, and it is wrong that, to date, our legislative and regulatory regime not only permits that to happen but actively facilitates it.