The Government is to launch an independent review into corporate governance of mutual life offices following this week's publication of Lord Penrose's comprehensive report into the Equitable Life debacle.
Former Gartmore chairman Paul Myners, who carried out the Treasury-commissioned review into institutional investment, is to lead the review, looking at member involvement in mutual office governance, board accountability and the level of FSA regulation that mutuals are subject to.
Industry experts believe that the review is as much a result of events surrounding Standard Life as it is an outcome of the fallout from Equitable.
Recommendations from the mutual review are expected to be delivered to the Government by the end of the year, with Treasury Financial Secretary Ruth Kelly saying mutual life office boards should be as accountable to members as plcs are to shareholders.
The Government is also planning to review the actuarial profession and it has asked the Accounting Standards Board to carry out an urgent study into with-profits business accounting by life insurers.
Commerzbank insurance analyst Roman Cizdyn says: “There were cultural issues discussed at length in the report and the Government is trying to stop such a culture if it exists elsewhere.”
Co-operative Financial Services chief executive Mervyn Pedelty says: “We maintain the mutual sector has a significant role to play in the future provision of financial services within the UK and we are confident the moves announced will in time further strengthen the inherent consumer appeal of the mutual sector.”