Rishi Sunak has been dragged into the row over LV’s future as he was bombarded with questions about the mutual insurer’s controversial takeover.
The Chancellor was quizzed by MPs about the role of City regulators in the sale of LV to US private equity shark Bain Capital, and what he knew about the deal.
He was also urged to squeeze more information from the insurer regarding the multi-million-pound fees which it will pay to its advisers.
Questions: Chancellor Rishi Sunak (pictured) was quizzed by MPs about the role of City regulators in the sale of LV to US private equity shark Bain Capital
So far, LV – which was founded in 1843 – has refused to come clean over how much of its members’ money has been splashed out on the sale.
The written questions were filed to Sunak by Gareth Thomas, the Labour MP who chairs the All-Party Parliamentary Group for Mutuals.
Thomas also fired off queries to Business Secretary Kwasi Kwarteng, asking him to press LV’s advisers to disclose their fees.
The questions come as LV’s members are voting on whether they want the Bain deal to go ahead.
They can send their ballots by post or online until December 8, or at an online meeting on December 10 – just three weeks away.
Thomas said: ‘We are now half way through the voting but Bain and Liverpool Victoria have continued to be secretive and opaque about their deal.
‘Given the growing number of questions, and with Bain and the LV board still not publishing full details, I hope ministers and regulators will use their clout to get the full answers members deserve.’
Experts and MPs of all parties have slammed the sale of LV, formerly known as Liverpool Victoria, to Bain. Currently, the 178-year-old life insurer is a mutual – meaning it is owned by its customers, and run for their benefit.
Fight: LV’s members are voting on whether they want the Bain deal to go ahead. They can send their ballots by post or online until December 8, or at an online meeting on December 10
For many policyholders, this is why they stored their money with LV. The business was founded to offer ‘penny policies’ to the poor of Liverpool to help them bury their dead with dignity, and its mutuality was a key part of its history.
But if it is taken over by Bain, as LV’s board is suggesting, it will be ripped of its mutual status and milked for profit by a cash-hungry investor.
Its 1.2m members are being offered just £100 by Bain to give up their ownership – a sum which has been branded ‘derisory’ and ‘a bribe’.
Those with more generous ‘with-profits’ policies, who share in LV’s fortunes, will also get an extra pay-out when their policy ends – but it is equivalent to just 0.1pc of the policy’s value for every year they have held it.
LV has claimed the sale is necessary, as it desperately needs extra cash from a new owner to expand and modernise its technology.
LV chief exec, Mark Hartigan (pictured), has insisted that Bain offered the ‘best financial outcome’
But critics of the deal have questioned whether a sale to a profit-hungry investor like Bain is the best solution for LV’s members. Some have questioned why LV chose Bain’s offer over a rival bid from Royal London, a fellow mutual.
LV’s chief executive, Mark Hartigan, has insisted that Bain’s offered the ‘best financial outcome’.
But he admitted it will also likely see him keep his job, on a much more generous pay package.
LV chairman Alan Cook – boss of the Post Office from 2006 to 2010 – was also due to stay on for another two years – but doubt has been cast over his future given the backlash facing the deal.
Royal London has since offered to make a fresh bid for LV, which would allow the firm to remain owned by its members. Royal London’s chief executive, Barry O’Dwyer, has urged LV and Bain to open discussions.
Critics, from former pensions minister Baroness Altmann to former deputy prime minister Lord Heseltine, have hit out at LV’s lack of transparency.
Thomas has now called on Sunak to meet with the Financial Conduct Authority (FCA) and the Bank of England, and tell them to push LV to reveal the fees it has paid to its advisers on the deal.
These include investment bank Fenchurch Advisory, City spinners FTI Consulting, and law firm Clifford Chance. The combined bill for these firms is thought to rack up into the multi-millions.
Sunak has also been told to ask the regulators what discussions they held on the LV takeover, and what complaints they have received from LV members.
Kwarteng was asked if he will review the effectiveness of transparency rules which govern takeovers of mutuals like LV, so members could have a better idea of what their money was being spent on.
Make your voice heard on LV
We are encouraging LV members, customers, or others, who would like to see it retain its mutual status, rather than be bought out by private equity, to write to it.
You could use the wording from the letter printed in the Daily Mail newspaper’s City pages (pictured here).
We have included the words for you to copy and paste into a letter below.
Send it to Alan Cook, Chairman of LV=, Liverpool Victoria, County Gates, Bournemouth, BH1 2NF
Dear Alan Cook,
I, the undersigned, urge you to reconsider your decision to sell LV= to Bain Capital and instead maintain its mutual status.