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Insurer LV = has been accused of "a number of shortcomings " in keeping clients informed of its potential sale to a US private equity firm.
Martin Shaw, chief executive of the Association of Financial Mutuals (AFM), told MPs that it is essential that mutuals keep their members informed about evolving strategies.
He said the decision to sell LV was "trist ", but " in line with the challenges within the company ".
The proposed £ 530million takeover by Bain Capital has caused a backlash.
LV =, founded in 1843 and formerly known as Liverpool Victoria, would lose its mutual status if the sale was successful.
On Monday, just a few weeks before the voting deadline, LV = a sent a detailed analysis to his 1.2 million members as to why he thought the Bain deal was the best, after pushing back the approach of a rival, Royal London.
Mr. Shaw told members of the Treasury Committee: "I think there were a number of shortcomings in the approach and I am sure that if admins had their time again they would improve the quality of communication throughout. "
He described the fate of LV = as a "tragedy in three acts ".
He said he invested in his general insurance business, knowing that the life insurance and pension branch was declining, but realizing "too late in the day that this was not the panacea they were hoping for ". She sold the general insurance business, but it didn't solved the original problem.
Other mutuals had solved similar problems, said Mr. Shaw, head of the professional body that represents mutual and nonprofit insurers, friendly societies and companies. 'other mutuals in UK.
LV = members would receive £ 100 each as part of the Bain Capital deal, and members for profit inwill receive more.
MPs have learned that bonuses paid at the time of demutualization are generally more than offset by lower returns on investment in the future and a lower level of customer service.
On Monday, LV = said that it would take a significant investment from the members to keep it a stand-alone business.
"Itwouldnotbefairforustoaskingourfor-profitmemberstofundafuturethatrequiressignificantinvestment,manyofwhichwouldnotbenefit,"said David Barral, senior independent director of LV =.
The Treasury Committee held a session unique on the state of the mutual sector with major figures in the sector, including mortgage companies and credit unions.
The committee also learned that mortgage companies were facing a fierce competition from banks in the sale of mortgages, due to the financial effects of the pandemic.
About £ 170 billion has been saved on current accounts, accountssavings and business accounts. t from individuals spending less during the pandemic and businesses receiving financial support from the government.
Mike Regnier, managing director of the Yorkshire Building Society, said the quartered retail banks wanted to lend this money in the form of mortgages, so they lowered interest rates to gain customers.
He said it would take many years for this extra money to filter through the system.
Building societies represent 23% of the UK mortgage market and 18% of the savings industry.