Liberal Democrat Treasury spokesman Vincent Cable is tabling a question to Chancellor Gordon Brown this week on whether the Government will continue to support mutuals following the recent turmoil surrounding Standard Life.
Cable believes Standard's decision to consider demutualisation has clouded the deb-ate on whether mutuals remain a viable proposition and whe-ther they contribute to the market as a whole.
He will ask Brown whether the Treasury plans to review the role of mutual ownership in the life sector and what steps the Chancellor is taking to ensure that investors have a choice of mutual ownership.
Cable will also query what representations the Treasury has received from policyholders regarding the future of Standard.
He has written a letter to FSA chief executive John Tiner and Treasury Financial Sec-retary Ruth Kelly highlighting his concerns that a poss-ible decision by Standard to demutualise could have a negative impact for investors.
Following Standard's ann-ouncement of a strategic review, Kelly said the FSA intends to consider the impact that changes in its reporting structure will have on individual firms, including mutuals, and on the industry as a whole as part of further development of its reserving proposals.
Cable says: “It is absolutely necessary to have a balance in the financial sector and for investors to be able to choose between mutuals and publicly listed companies. Mutuals have some distinct advantages for policyholders and that opportunity should be kept alive.
“I think that Standard is almost a separate issue. Its decision to look at demutualisation could make it easier for it to raise funds externally but it would be obliged to pay higher returns. I would question why senior management have decided to consider this now.”