HISTORIC PRESS RELEASE : Government welcomes Myners report on the corporate governance of life mutuals [December 2004]

The press release issued by HM Treasury on 20 December 2004.

Paul Myners today published his report on the corporate governance of life mutuals commissioned by the Treasury in March 2004.

The Government welcomes the report, which provides a thorough analysis of the issues, and a proportionate and pragmatic set of recommendations. The review builds on the work of Sir Derek Higgs on corporate governance and complements the reviews by Sir Derek Morris, Paul Myners and Ron Sandler in improving the efficiency of the investment chain which links savers and the businesses in which they invest.  The issues identified by Paul Myners in this report concerning the influence of members of life mutuals echo those he considered in the review of institutional investment for members of occupational pension schemes.

Paul Myners’ report recommends adoption by life mutuals of the Combined Code on corporate governance, which has been annotated to reflect the circumstances of life mutuals.  The annotations serve to emphasise the importance, in the life mutual context of greater transparency and accountability in the boardroom, formal performance appraisal, proactive support for non-executive directors and closer links between non-executive directors and mutual members.  Complementary proposals aim to foster accountability by life mutuals to their members and to other market monitors through promoting better member relations and disclosure of relevant information.

The Government believes Paul Myners recommendations will encourage the success of the sector and protect the interests of its members. It calls on the mutual life sector to begin implementing the recommendations put forward by the review now. The Financial Secretary to the Treasury, Stephen Timms MP, plans shortly to meet industry leaders to affirm this message.

The Government will be reviewing the impact of implementing the proposals after two years after the Code comes into effect.

Stephen Timms said:

 “Mutual life offices are an important part of the UK’s financial services sector, providing a home for the savings of nearly 10 million members.  The way in which these organisations are run is important to the overall health of the economy as well as to the financial well-being of the individual policyholders concerned.   The challenge for life mutuals – and in particular its representative bodies – is to build on the momentum of this report to drive forward the review’s recommendations.  The Government is now looking for life mutuals to respond.”