LATEST PRESS RELEASES and COMMENTS
Here we cover all the very latest news. If you have a specific enquiry or something you’d like to find out about, please get in touch. For all media enquiries, please contact the AFM team at Elephant Communications at email@example.com or call 07738 160961. Alternatively contact Martin Shaw at AFM via email firstname.lastname@example.org or call 0788 754 7195.
12 October 2011
Rating agency downgrade
The decision by Moody's to downgrade the credit rating of a number of banks and building societies wasinevitable whenthe Government made it clear earlier this year that deposit-takers should not be seen simply as 'too big to fail'. So this movereflects a catching up by the agency rather than a change in the creditworthiness of the institutions. That said, it was not too long ago that Dexia from Belgium passed its stress testing with flying colours, yetit is now in the process of seeking a further bail-out.
"Investors should not be worried- and as long as they avoid holding more than £85,000 in any bank or building society, their deposits are safe."
17 August 2011
Educating to save as well as saving to educate
Urgent and significant attention needs to be given to those saving for further education according to Martin Shaw, Chief Executive of the Association of Financial Mutuals:
“With the introduction of new tuition fees it has never been more important for parents to start planning towards meeting the cost of education. However, what children need today, just as much as saving to educate, is educating to save. This point is made more prescient with the recent research from the Personal Finance Education Group showing that over half of all teenagers are in debt by the age of 17.
“Additional student loans will only exacerbate this issue unless there is a plan in place from an early age especially as students starting University in 2012 could leave with debts as high as £50,000*. For example, if the parents of a student starting university this year had put aside £50 a month from birth, they would have accumulated over £20,000 in savings. Most importantly, they would have helped to demonstrate the value of financial planning and responsibility.
“There are many options open to parents looking to save a regular sum for the long term. Many friendly societies offer Tax Exempt Savings Plans, and from November this year it will be possible to open a Junior ISA to help fund a child’s education.”
18 July 2011
AFM responds to report by Treasury Select Committee on the Retail Distribution Review
The Treasury Select Committee (TSC) has concluded in its report that the implementation of the Retail Distribution Review (RDR) should be delayed by 12 months.
In the Association of Financial Mutual’s submission to the TSC in January, we argued that without urgent and significant attention the review could not be “effectively delivered by 31 December 2012”. We have not seen that greater urgency emerge, and as product providers with no shortage of willingness to engage with the Financial Services Authority, we remain very concerned that so much of the detail needed to implement the RDR is still awaited. Meanwhile, it is quite possible that much of the RDR will be superseded within 12 months by new European regulation.
If the Committee wanted corroborating evidence for a delay it should look no further to the announcement on Friday from Cooperative Financial Services that in anticipation of the RDR it is seeking to offload its life business and make 670 advisers redundant. We conclude therefore that the call for a delay is welcome and that FSA should carefully consider whether it is better to implement such seismic changes quickly, or properly.
18 July 2011
AFM welcomes MPs' call on government to promote financial mutuals
The Association of Financial Mutuals welcomes the report issued today by the All-Party Group on Financial Mutuals, following their Short Inquiry into Corporate Diversity in Financial Services.
The report helpfully assesses how well the government and the Financial Services Authority deliver on the coalition agreement commitment to “foster diversity and strengthen mutuals”. For the government the prognosis is, could do better, whilst there is real concern that the regulator has failed to recognise the virtues of the mutual business model and has increasingly made it more difficult for mutuals to compete on equal terms.
We have though begun to see the FSA talk more enthusiastically about better recognising the needs of the mutual sector of late, and we are very grateful to the Members of Parliament that make up the All-Party Group for their help in enlightening Hector Sants and colleagues.
In particular we hope that the Government heeds the report, and takes it as an opportunity to develop a clear strategy to support the mutual sector in a meaningful way. All the evidence in this report and more widely shows that the corporate business model is by no means perfect, and the misaligned priorities of managers in shareholder owned companies was at the heart of the financial crisis. That should be reason enough for government to seek mutual solutions to key strategy issues, and we are very keen to have further dialogue with Treasury about the ways that mutual insurers and friendly societies can help deliver government policy.
30 June 2011
Martin Shaw, CEO of the Association of Financial Mutuals whose members provide insurance products, calls for the industry to implement its own code of conduct as an interim measure to a ban on the payment of referral fees
“The Association of Financial Mutuals supports yesterday’s calls on the outright ban of referral fees as opposed to greater transparency but we recommend that in the meantime the insurance industry proactively takes action and sets up its own code of conduct, which we would be very happy to help develop. No motor insurance provider within AFM sells customer data to other organisations and our members give their strong support to the campaign to introduce major reform in this area.
“Ex-Home Secretary Jack Straw has criticised insurers who have been dragged into the practice. In line with our mutual values, we seek always to work in the best interests of customers and encourage other insurers to follow suit: in our view the practice of selling customer data contributes to the cost of insurance and the compensation culture, and is not therefore in the interests of the customer.”
30 June 2011
Martin Shaw of the Association of Financial Mutuals reacts to Mark Hoban’s proposed gender consultation with the Insurance Industry
“March’s Gender Ruling was greeted with a resigned sense of disappointment because it is bad news for consumers. They are the ones who will get a worse deal as a result. The insurance industry was exempt from previous gender legislation because there is clear evidence that it is a fair basis on which to reflect different risks. Therefore, to ignore gender in insurance would be to discriminate not only against young female drivers but male annuitants as well.”
“Insurers are already beginning to adjust pricing and practice to take account of the ruling, so early clarity from the UK Government and Brussels is vital.”
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14 May 2011
Martin Shaw, Chief Executive at Association of Financial Mutuals comments
"Rumours of the demise of the Child Trust Fund are very much premature. The statement issued yesterday indicates the Government is seeking to reduce payments for higher earners. That suggests quite clearly keeping the product universal albeit it at a lower cost to the Exchequer. This is very consistent with the talks that the Association of Financial Mutuals, whose members manage over half of all CTFs, has been having with political parties for some time, and we are keen to work with them on that basis.
The Child Trust Fund has been a highly successful product, with millions of parents savings for their child's future. Stopping payments to people earning over £16,000 now would undermine the product and destroy child saving- this flies in the face of wider Government policy."
11 May 2011
Martin Shaw, CEO of the Association of Financial Mutuals (AFM) responds to Mark Hoban’s comments at the All Party Parliamentary Group for Building Societies and Financial Mutuals
“When giving evidence, the Minister stressed that the government is neutral on ownership and was reluctant to offer a view on the sector’s virtues or on the FSA’s attempts to undermine the business model. As the "Minister for Mutuals", this lack of engagement is disconcerting and is comparable to a Minister for Pensions who is unsure on the case for retirement planning.
“A stronger mutual sector will contribute to financial stability and help increase access to financial services. We continue to speak to the Treasury, providing evidence of the Mutual sector’s value and the danger of the FSA's approach”.
11 April 2011
Martin Shaw, CEO of the Association of Financial Mutuals, responds to the Treasury's consultation paper: A New Approach to Financial Regulation: Building a Stronger System
There is significantly more detail in the new consultation which provides much more assurance as to the way financial regulation will be conducted in future. We are broadly supportive on the approach proposed.
In the recent past we have seen regulators respond in what we often regard to be a cavalier manner to political criticism of their contribution to the bank-inspired financial crisis. This has resulted in sometimes poorly designed, reactive regulation, both in the UK and in Europe, which has placed new and disproportionate burdens on many firms which do not pose the same systemic risk.
We believe that the new architecture proposed will make this less likely, so long as supervisors properly understand the markets they are regulating, and act in a manner that is balanced and proportionate, both to the likelihood and the impact of any risks they seek to address.
The received wisdom in regulation and legislation is that the shareholder owned model is superior, or else that the time spent regulating different business models in a more appropriate manner is not worthwhile. We are grateful therefore that the coalition Government is seeking to promote diversity of ownership and seeks way to ensure that regulation is more aligned with this ambition.
We believe independent day-to-day management of the FSCS and FOS will not be compromised by drawing them more closely into the regulatory system. We conclude that both FSCS and FOS should become subsidiaries of the FCA. This approach does not compromise their core role, but does ensure that management of the FSCS and FOS align with the regulatory system as a whole. We have seen numerous instances where process failure within each of FSCS and FOS has risked undermining the regulatory system, and continued lack of proper accountability will continue to pose a threat. The benefits of seeing FSCS and FOS as subsidiaries of FCA include:
- Joined up approach to regulation across all regulatory bodies
- More effective information sharing and informed decision making
- Improved early warning systems
- Better capacity to act quickly on emerging issues
- More visible attention to regulatory process
- Shared commitment to work with a common but proportionate consumer protection purpose
- Less risk of ‘back-door regulation’
- Cost synergies that result from shared services and single management lines.
To speak to Martin Shaw in more detail about AFM’s response, please contact Stefanie Ives on Stefanie.Ives@mhpc.comor 0203 128 8585.
23 March 2011
Commentator: Martin Shaw, CEO for the Association of Financial Mutuals
Input available: Confirmation that the Junior ISA will be launched in November is a welcome development as the need to build up a nest egg for milestones such as student fees or a house deposit is more vital than ever. We believe the Junior ISA will be the primary savings account for families and AFM and its member are planning for this exciting new product. However, while previously, every child would receive a Child Trust Fund and a voucher at birth, we regret that this will not happen for the Junior ISA. As a result, poorer families in particular will be disadvantaged.
Please note: AFM has compiled comparative figures for a child reaching 18; one with a CTF and one with a Junior ISA to show the difference in monetary terms. These are available on request.
The Mutual Manifesto challenges all political parties to show they understand the mutual sector.
Mutuals have proved themselves to be resilient in recent years and have seen rapid increases in market share between 2008 and 2010 being at the forefront of product innovation in the insurance sector.”
John Reeve Chief Executive
Family Investment 2011
The 2013 AFM Conference and Annual General Meeting had the theme "MAKING MUTUALITY MEANINGFUL" and was held at Heythrop Park, Oxfordshire, between 15 and 17 October.