Treasury select committee chairman John McFall has attacked Standard Life and new group chief executive Sandy Crombie for failing to be honest with policyholders over its decision to consider demutualisation.
Speaking at a Treasury select committee investigation on restoring confidence in long-term savings this week, Labour MP McFall slammed Standard Life for publishing a statement on its website which told policyholders that the pending mutuality discussions would have no immediate effect on them.
Crombie said: “Financially, we are a very strong company.” He denied that the firm's discussions with the regulator and its decision to look at demutualising would have an immediate impact on policyholders.
McFall described this statement as misleading and damaging to consumer confidence in an industry which has been “going downhill faster than a slalom skier”.
Crombie maintained that the company had done its utmost to ensure that pol-icyholders remain informed and said Standard would be contacting them again in the next few weeks.
McFall went on to highlight the bonus increases that each of the five life offices appearing before the select committee – Aviva, Legal & General, Prudential, Royal & Sun Alliance and Standard – had awarded to senior executives between 1999 and 2002.
Standard topped the table with a rise of 71.9 per cent followed by the Pru with a 52.5 per cent increase and Aviva with a 45 per cent increase.
McFall asked whether the group felt that it could justify “double-digit” pay increases to policyholders who had suffered a painful year of bonus cuts.
He said: “Do you feel it would be too strong to say that Standard has a problem? This is not grossly misleading, for a company that has dumped its chief executive, policy earnings have been slashed and the FSA investigators have come in.”
Crombie said: “I cannot comment on the retirement of Mr Lumsden. We are in discussions with the FSA on new valuations and have issued a statement on this but these discussions will have no impact on policies at the moment.”
Select committee reports, p3 and p14