Myners urges tougher curbs on life companies

Paul Myners, the chairman of Guardian Media Group, set the wheels of his Treasury-commissioned review of the mutual life insurance sector in motion yesterday, calling for tougher rules on corporate governance to eliminate the possibility of another crisis such as Equitable Life.

Paul Myners, the chairman of Guardian Media Group, set the wheels of his Treasury-commissioned review of the mutual life insurance sector in motion yesterday, calling for tougher rules on corporate governance to eliminate the possibility of another crisis such as Equitable Life.

In a consultation document, published yesterday, Mr Myners said he wanted to provide a "sound basis" for the sector's future health and prosperity, raising the standard of corporate governance to the level of the publicly quoted sector.

His first round of suggestions included the possible introduction of a new code of governance specifically tailored for the sector, which companies would be bound to abide by.

He also said he would look to find a way of keeping the board under pressure from policyholders, in the same way that publicly quoted companies are kept on their toes by large institutional shareholders. He said that it was a concern that mutual insurers were not subject to the market discipline of the threat of takeover, or the concentrated ownership influence of large shareholders.

Launching the document, Mr Myners said: "I hope this consultation process will reach as many people as possible and that everyone with an interest will respond.

"Mutual life offices are a sizeable presence in the market for life insurance in the UK. They are valued by their policyholders and contribute to the diversity of the insurance sector. My challenge is to promote in this sector the very best corporate governance practice, providing a sound basis for its future health and prosperity.

"Some of the points made by Lord Penrose in his inquiry into events at Equitable Life go to the heart of how good governance is delivered - in mutuals and in other types of organisation. In particular, he poses some fundamental questions about what the practical limitations are on the ability of non-executive directors to contribute to technically complex businesses, and what our reasonable expectations should be."

The Myners review was commissioned by Ruth Kelly, the Financial Secretary to the Treasury, shortly after Lord Penrose published his report in to Equitable.

The review is not the first that Mr Myners has carried out for the Government. Three years ago, he was commissioned to investigate the institutional investment market, also for the Treasury. Recently, however, Mr Myners has been more in the public eye for his involvement with Marks & Spencer, for which he has been interim chairman since Luc Vandevelde was ousted two months ago.tion at M&S.