Watchdog slammed over LV sale: FCA told to reveal details of rival bid

The City watchdog has come under fire over its handling of the US private equity takeover of LV.

The Financial Conduct Authority (FCA) yesterday received a letter from the chairman of a group of MPs demanding that it release details about the circumstances surrounding the historic British mutual insurer’s £530million sale to Bain Capital.

The deal would see LV, formerly Liverpool Victoria, lose its mutual status. It would no longer be owned by its members but run by a profit-hungry investor.

MPs are interested in a rival offer from fellow British mutual Royal London, which would have saved the 178-year-old insurer from private equity barons. 

They also quizzed the FCA on what it knows about the potential rewards being offered to LV bosses.

In a letter seen by the Mail, the chairman of the All Party Parliamentary Group for Mutuals Gareth Thomas asked the watchdog to confirm Royal London offered more money than Bain.

For legal reasons Royal London cannot confirm if its offer was higher, but it has been reported that it offered £540million for LV – £10million more than Bain. 

A panel representing 340,000 with-profits LV members was said to have favoured the Royal London offer, initially rejecting Bain Capital. 

Now MPs are demanding the FCA fulfils its ‘crucial obligation’ to protect consumers and publish what it knows about the rival offer.

The letter said: ‘It is now clear that the two most valuable bids received by the Liverpool Victoria board were from Bain Capital and crucially, another mutual, Royal London. 

Will you confirm what many have explicitly suggested; that Royal London offered more money than Bain Capital?’

Thomas said the 1.16m members who own LV cannot make a ‘complete assessment’ of the bids without seeing the report.

Bain’s bid for LV has garnered criticism across the political spectrum.

Tory MP Kevin Hollinrake said: ‘The FCA needs to set out clearly the evidence and basis on which it has considered the consumer interest of the sale to Bain Capital.’

Members will be able to vote on the deal between now and December 8 or at a special meeting on December 10. 

If it is approved, ordinary members will receive a £100 payout while with-profits members will be given an additional boost when their policies mature. 

The deal has been slammed by members, who have called the £100 offer a ‘bribe’ and a ‘paltry’ sum.

Thomas also urged the FCA to release any information it has about how much chief executive Mark Hartigan and chairman Alan Cook will be paid if the deal passes. Hartigan has claimed he will gain nothing.

But it is understood he will receive a stake in the company and a pay rise potentially worth millions if members vote for the takeover. 

Cook will stay in post earning £210,000 a year. Both would likely have lost their jobs under a deal with Royal London.

It is thought Royal London is waiting in the wings and could return with its own offer for LV if members reject the Bain deal. 

LV bosses claimed ‘Bain Capital was the only option that offered both an excellent financial outcome for members and gave unrivalled support for the LV brand, our people and UK-based locations’.