Open letter to Mr D Newbigging, OBE, chairman, Friends Provident As an IFA and Friends Provident policyholder, I am writing to express my disappointment at the way the demutualisation of the company is being used to hide a change in the membership rules which is extending the membership substantially and cannot be in the interests of members.
I am referring to the changes in the rules to extend membership to people who have bought secondhand endowment policies and those whose policies have matured since May 4, 2000 since they have already received benefits based on ownership of a withprofits policy with a mutual life office throughout the term of the policy.
I do not dispute members should be asked whether to include these additional classes of policyholder. However, as a member who has taken the time to read the small print in your 88-page members' circular, I am appalled at the way the vote appears to have been influenced by including the above issues with the vote on whether to demutualise.
Instead of three different issues being put to a separate vote, the whole thing is being presented as “yes” or “no”. Members can vote to receive their free shares if, and only if, they first agree to give away a large quantity of them first.
This “dilution” is described by the “independent” actuary as “acceptable”. I am sure it is acceptable to all those who under the existing rules did not qualify, and must think that Christmas is due in July 2001 but it is not acceptable to me as a member. I will be urging clients of this firm to be aware of the full effect of accepting the reduced share allocation.I would urge all members of Friends Provident to vote against the demutualisation in its current form until Friends Provident can present the vote in a manner which is fair to its existing members.
In particular, I feel that you should find space in an 88-page document to indicate how much of the company is being given away to these new members. My feeling is that the new classes of member are likely to receive considerable numbers of free shares. Matured policies are likely to have much greater benefits than policies with several or more years left to accrue benefits. Secondhand policies are also well advanced and therefore both classes of new members can expect substantial benefits.
Is it coincidence that the timescale of the demutualisation has been brought forward so that these issues can be glossed over and rushed through?
Peter Rutherford & Co Financial Planning Services,