The proposal is to facilitate Mutuals to make it easier to focus more on writing NP business when WP business is in serious decline. I think one of the aims is to reduce/stop the increased levels of demutualisation (Scottish Widows, Standard Life, Norwich Union etc.) and closures to New Business. The Regulator believes closure does not serve the interest of NP members interests and mutuals provide genuine competition to proprietaries as well as choice for consumers .
The scheme will require mutuals to identify from the Composite Fund which part is deemed "With-Profit Fund" and which part is "Mutual Members Fund". Not all the mutual members will be With-Profit Policyholders so I should think there may be non With-Profit members out there who may have beneficial "interest" when WP policy membership nears "extinction". Currently the rights of the WP policyholders within the mutual are so high that these other members are pretty much non-existent - which is one of the objectives the the regulator is hoping to address.
All said, I still support the notion that it may come a point when demutualisation may be inevitable, so the scheme is probably just deferring this activity (hopefully, for a very long time) to keep the mutuality concept going.
Last edited by a moderator: Apr 5, 2013