Standard Life policyholder David Stonebanks is rallying support to present demutualisation calls to ...
Standard Life policyholder David Stonebanks is rallying support to present demutualisation calls to the mutual life insurer on July 15th because, he argues, with-profits policies are already treated like "shareholders" but without all of the benefits.
A campaign was started on the internet recently by Stonebanks through www.sldm.org.uk to gather the 2,000 signatures needed to try and put forward a call for a Special General Meeting on the issue.
That said, no presentation could be made under Standard Life's own rules at least July 2003 because it ruled at the last demutualisation challenge - in 2000 - there could not be another vote for three years.
Now that deadline is up, Stonebanks is determined to press ahead with the challenge and is traveling to Edinburgh on July 15th to deliver the support forms backing demutualisation, because he believes the Equitable affair has shown just how with-profits policyholders can end up unexpectedly paying for problems or guarantees offered elsewhere in the company.
But Stonebanks main argument is that with-profits policyholders already stand as shareholders in a mutual company, because their investments carry both the risks and the rewards that the firm faces.
"WP policyholders stand as shareholders in a mutual company. They get the rewards if the business does well, but as [Equitable Life's] policyholders have found, they also carry the risks of the business," says Stonebanks.
"There are no shareholders to carry the can but the sale of with-profits funds are falling and with-profits policyholders have found they can be robbed from the fund to cover other liabilities. When pensions mis-selling was found, the money came out of the with-profits fund. They were sold on promises that they would rise every year, and it worked for 30 years, but now people are losing money," he argues.
In order to successfully force a demutualisation, Standard Life's rules state at least 75% of policyholders must vote for the deal, but Stonebanks believes a vote of at least 60% would be frightening enough for SL directors.
Based on the size of the firm and estimates on its free asset ratio, Stonebanks argues that with-profit policyholders can expect to receive around 18% on top of the value of their fund were Standard Life to demutualise.
Based on this evidence, IFAs would be failing to give 'best advice' to clients if they did not advise WP investors to vote for a demutualisation.
Partner Insight: For Blackfinch, the arrival of its IHT portfolio services was a 'natural evolution' in the group's offering and points to an established track record of returning cash to investors.
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