Response by AFS to the HM Treasury: Myners Review consultation document, July 2004

Executive Summary

The members of AFS welcome the Myners Review and are keen to provide constructive consultation that will enhance the governance of financial mutuals. We see tremendous business opportunities for well run mutuals which will benefit individuals and society as a whole. Given that there are fundamental differences in structure between the proprietary and mutual model there is no inherent reason to assume that one is better than the other. The diversity offered by both mutuals and proprietary companies in the UK should be encouraged with the strengths of both being brought to the forefront. The Penrose Report, which prepared the ground for the Myners Review, was critical of the management of Equitable Life. It is the belief of AFS that these issues were related to management and control rather than to the mutual form of governance. The same governance issues could and indeed have happened in proprietary companies in recent years, eg Independent Insurance. The Myners Review document highlights continually the benefits of the large institutional shareholders in the proprietary model. It is important to point out that they do not actually own the company and that often these large institutional investors are voting on behalf of their customers’ money normally with no consultation with the providers of capital.

Corporate Governance Guidance

Board Effectiveness

Policyholder voice


Market disciplines

Advantages of financial mutuals