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9 July 2004

MYNERS REVIEW OF MUTUALS - CONSULTATION PUBLISHED

Paul Myners today published a consultation document seeking views about various aspects of the governance of mutual life offices.  The document also explores some wider issues, arising from Lord Penrose’s report into Equitable Life, about the role of non-executive directors in complex businesses.   

Specific questions raised include ones about:

  • the corporate governance guidance that applies to mutual life offices
  • the role of non-executive directors in complex businesses such as life insurance,  including the information and advice that they use
  • the role of policyholders in the corporate governance of  mutual life offices
  • the role of regulation in the corporate governance of mutual life offices
  • the market disciplines that influence mutual life offices
  • the potential advantages of the mutual form, particularly in the financial sector
  • the structure of the UK mutual life insurance market
  • practice in other countries

Launching the document, Paul Myners said:

“I hope this consultation process will reach as many people as possible and that everyone with an interest will respond.

Mutual life offices are a sizeable presence in the market for life insurance in the UK.  They are valued by their policyholders and contribute to the diversity of the insurance sector.  My challenge is to promote in this sector the very best corporate governance practice, providing a sound basis for its future health and prosperity.

Some of the points made by Lord Penrose in his Inquiry into events at Equitable Life go to the heart of how good governance is delivered – in mutuals and in other types of organisation.   In particular, he poses some fundamental questions about what the practical limitations are on the ability of non-executive directors to contribute to technically complex businesses, and what our reasonable expectations should be.”

The closing date for responses to the consultation is 17 September.   Paul Myners will submit the final report of the review to the Government by the end of December 2004.

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NOTES TO EDITORS

1.  Following the Report of the Equitable Life Inquiry, led by Lord Penrose, Ruth Kelly, the Financial Secretary to the Treasury, asked Paul Myners to conduct an independent review into the governance of mutual life insurance offices in the UK.

2. The review’s full terms of reference are to:

Consider the governance framework for mutual life offices in comparison with that for comparable companies (and, where relevant, for listed companies).

Where appropriate, bring forward recommendations to ensure that boards of mutual life offices are as accountable to their members as boards of comparable companies are to their shareholders.

As part of this, the review will examine:

  • The level of member involvement in the governance of mutual life offices;
  • Board accountability for mutual life offices; and
  • The level of regulation by the FSA to which mutual life offices are subject.

The review will consult as widely as possible, taking into account the recent experience of other mutuals in this area in developing its conclusions and recommendations.

Since the governance of mutual life offices has much in common with that of other mutual societies, where appropriate, the review may also develop general governance principles for other types of mutual (taking into account the particular characteristics of other parts of the mutual sector).
The review will deliver a report with recommendations by the end of 2004.

3.  Paul Myners is currently chairman of Guardian Media Group and interim chairman of Marks & Spencer.  He was formerly chairman of Gartmore Investment Management from 1987-2000.  In 2000 he was commissioned by the Treasury to lead a review of institutional investment in the UK.  The review reported in 2001.

4. The pdf file of the consultation document can be downloaded from www.hm-treasury.gov.uk/myners. Hard copies can be requested from the HM Treasury enquiries unit by e-mail: enquiries@hm-treasury.gov.uk or on tel: 020 7270 4558.

5.  Responses to the consultation should be sent by email to: myners.review@hm-treasury.gov.uk

Or by post to: 
Myners review
Room 4/16
HM Treasury
1 Horse Guards Road
London SW1A 2HQ
Tel: 020 7270 4759
Fax: 020 7451 7699

We will ensure the confidentiality of any information which respondents clearly tell us is confidential in nature.  With this exception, you should be aware that all responses received may be made public unless specifically requested otherwise.

6.  Media enquiries should be directed to Simon Moyse, the review’s press officer, tel 020 7270 4420.

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