Myners report calls for urgent shake-up in mutuals sector

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The Independent Online

Paul Myners, the chairman of Marks & Spencer, will today launch a scathing attack on the corporate governance practices of the UK's mutually owned financial services companies, as he publishes his government-commissioned report into the sector.

Paul Myners, the chairman of Marks & Spencer, will today launch a scathing attack on the corporate governance practices of the UK's mutually owned financial services companies, as he publishes his government-commissioned report into the sector.

Among a series of recommendations aimed at raising standards in the sector, Mr Myners is expected to call for mutual companies to appoint more non-executive directors to their boards, and to give them a greater role in the running of the company. As part of his conclusions, Mr Myners is likely to call on the sector to comply with a new, more stringent corporate governance code, which will be drawn up over the next few months.

The report was commissioned by the Treasury this year, after the publication of Lord Penrose's report into Equitable Life, which criticised the mutual culture, suggesting that it was one of the main reasons the ailing life assurer's problems were not spotted sooner.

Mutual companies are owned by their customers, without outside shareholders, and so are subject to less scrutiny at board level. They include all remaining building societies and a handful of life insurers, such as Standard Life.

Mr Myners' latest report coincides with the publication of another piece of research looking into standards in the mutual life insurance sector, published by the Financial Services Research Forum (FSRF). This report highlights the accountability problems in the sector, revealing that half of all mutual life insurers have no audit or remuneration committee - a requirement that is mandatory for publicly quoted companies.

The FSRF also reveals that the market share of mutual life offices has declined significantly over the past decade, from about 50 to just 17 per cent of the life insurance market, as an increasing number of the largest companies have chosen to demutualise.

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