Up until recently, I had heard of most of the major mutual organizations, including the likes of Nationwide, Royal London, LV= and NFU Mutual, but couldn’t really tell you why. they are different from any other big and flashy financial services by brand.
Finally, after looking to buy income protection from LV at the beginning of the year, I was invited to participate in the vote of key LV members on whether to stay as a party or be sold to the public. US private equity firm Bain Capital for £530 million.
This isn’t the only offer available to an insurer with 1.25 million members. General members of the Royal Family of London put forward a bid, saying they would keep LV= as a general partner, but this was rejected.
Insurance companies, building unions, credit unions and friendly societies all make up what is known as reciprocity and they exist throughout the UK, providing financial products and services. alternatives to traditional banks.
So what were people so upset about?
The vote came because LV=’s chief executive, Mark Hartigan, argued that the insurer needed to get rid of the language in order to survive. The potential sale, which has been criticized by some groups and politicians, would mean that LV = loses its overall standing.
This week, however, members of LV=, formerly known as Liverpool Victoria, stood up against the decision and voted against the sale.
Members would receive £100 each if the sale had taken place, but not enough votes for it, arguing among other reasons that the value of the sale did not match LV’s status = as a party.
The 178-year-old insurance company, which was first set up to cover funeral costs for those in Liverpool who cannot afford them, certainly has problems, but what is clear now is that they will remain. is one side.
But what role do different people play in our society? As the LV= deal shows, they are owned by their members, however the interests of these companies, who pride themselves on focusing on people rather than profits, are extensive.
The parties offer an ethical way for consumers to borrow, invest and protect their money. Most are over 100 years old and specifically set up to benefit the local community.
While they may at first operate in the same way as a traditional bank, behind the scenes they operate very differently.
For starters, there are no shareholders; they are not-for-profit organizations and their boards and management teams both make decisions together in the interest of their members.
This means that every decision made should benefit existing or new members, and not generate additional money for the company. This is arguably the most distinctive aspect of reciprocity, and what sets it apart from the banks on the street.
However, they also offer competitive financial products, some of which are market leaders, and aim to provide all members with affordable options.
Mutual members must serve all members, including those with lower incomes. For example, credit unions offer many a viable alternative to large banks. They are the bridge between expensive short-term lenders and banks that are often unavailable because of their credit histories.
Gina Fusco, director of strategy and marketing at NFU Mutual, explains: “As two parties, we do not work to maximize returns for our shareholders but to provide sustainable products and services. service appreciated by members, while supporting agriculture and the wider communities in which we live and work.
“For over 100 years, our reciprocity has allowed us to embrace a customer-centric culture, built on our philosophy of combining high-quality products with service. local individuals.”
During the pandemic, all financial institutions have stepped in and helped struggling customers, from mortgage vacations to interest rate cuts.
The same goes for different people. For example, OneFamily and the Foresters Friendly Society have given out thousands of pounds in special grants designed to help members who are struggling financially.
They are also committed to helping those who cannot get a basic bank account, known as “unbanked”. Care helplines to assist members with health issues, legal assistance, emergency financial help and mental health counseling are offered by many parties. Several major banks, notably HSBC, are also working to help this group.
However, perhaps what disparate people are best known for is their work in the community. From sponsoring local projects to raising money for charities, working to help locals is part of why mutualistic organizations were first established and it remains at the heart of how they operate.
“Supporting the communities in which we do business is an important part of ‘reciprocity’, and that means giving time,” said Martin Shaw, chief executive officer of the Association for Mutual Funds. and money.
“Many of our member companies encourage their employees to volunteer for good causes and allow them time to do so, as well as donate,” he added.
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