The Financial Conduct Authority (FCA) has required LV= to improve communications with members as it granted permission for the mutual to proceed with a court hearing related to its proposed sale to US private equity firm Bain Capital
In a statement, the FCA also confirmed it was not objecting to LV= taking the next steps towards asking members for their views on the £530m sale and resulting demutualisation.
In order for LV= to make the proposed change, 75% of those who do vote will need to vote for it before it then proceeding to a court hearing.
If accepted by members, the deal would mean LV= would no longer be owned by its members, subject to the insurer meeting a small number of additional requirements.
The communication requirements were revealed in a letter published by the FCA which also outlined next steps for the proposed transaction.
In the letter the FCA revealed it had challenged LV= about its current and planned engagement and communications strategy with policyholders and members, citing this as an area of “particular concern”.
The regulator added that it has focused on ensuring LV= does all it can to support members, particularly once full voting packs are sent and that it has appropriately recognised the different interests of different policyholders in their engagement and communications.
It also required the insurer to nominate a specific senior manager to take responsibility for monitoring and ensuring that service standards are maintained if the deal is completed.
The FCA’s requests included:
- That LV= operate extended opening hours for its customer helpline during the relevant period up to the date of the special general meeting (SGM).
- That LV= look to add further Zoom or webinar sessions for policyholders and members beyond those they already have planned, with a focus on responding to questions rather than presenting more information.
- That additional sessions are held at different times of the day to improve policyholders’ and members’ ability to engage at a time that suits them, to ask questions and hear a response from LV and the independent expert, who will attend all of these sessions.
- Where LV= receives requests for further engagement or information from policyholders and members, these should be acted upon and that LV= should do everything in their power to meet the expectations of these policyholders and members (within reason) in this regard.
The FCA added it will continue to scrutinise LV=’s proposals and activities should the court confirm the member vote can continue as planned.
The proposed sale has not been without controversy. Last month, Gareth Thomas MP, who is chairman of the all-party parliamentary group for mutuals (APPGM), warned the FCA may be repeating past failings and ignoring the report into the collapse of London Capital & Finance (LCF) as it handles the potential demutualisation and takeover of LV=.
He also criticised the LV= leadership and called on its chairman Alan Cook to answer questions in Parliament, and in April the APPG accused LV= of not properly consulting members over the life insurer’s sale.
Earlier this month, Justin Harper, protection proposition and marketing director at LV=, told Health & Protection was planning with the expectation that the deal would be completed.
“There were other options but this offer is best for LV=, it gives independence and a capital injection. They have bought into our strategic plan and management team,” he said.
LV= has been approached for comment.
