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Kelly denies mutual prejudice as MP raises fears on reserves

Scottish National Party MP Alex Salmond has challenged the Treasury over its financial reserve requirements for mutual companies.

Salmond raised fears over the future of demutualised life companies in a debate at Westminster Hall in London last week.

He is concerned that Standard&#39s mutuality review could see the company taken over by a rival, similar to Scottish Amicable&#39s acquisition by Prudential and Scottish Mutual&#39s purchase by the Abbey group.

Salmond asked Treasury Financial Secretary Ruth Kelly to consider whether forcing a mutual to be fully reserved undermines its claim of mutuality and the advantages that go with it.

Kelly denied that there was any conspiracy against Standard Life, mutuals or Scottish financial services and that proposals to update regulation were not part of a demutualisation campaign by the FSA or the Government.

She said Standard is in not being singled out by the FSA in terms of realistic reporting, adding that the move is part of much needed regulation of capital requirements for life offices, whether mutual or quoted.

Salmond said: “Is the Financial Secretary concerned that some of the new ratios and applications of guarantees may create an inadvertent pre-judice against mutual ownership and will make it more difficult for big companies to remain in mutual ownership?” Kelly said: “The Government recognises the contribution of all forms of mutual financial services providers to offering choice and diversity in the sector. The recent prop-osals to update life insurance regulation are categorically not part of a demutualisation campaign by the FSA or the Government.”

•FSA letter, p20

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