Case of mutual misunderstanding
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Your support makes all the difference.THE British have little understanding of the word 'mutual' as it is applied to financial institutions, according to research commissioned by Lautro, the life insurance regulator. The study followed protests over the Scottish Mutual life company retaining that name even though it became a proprietary company after its takeover by Abbey National.
Mutual insurers are owned by their policyholders, writes Maria Scott, and often claim that they offer better value to investors because profits are for their benefit rather than for shareholders. But while many mutuals figure prominently in investment performance league tables, mutuality is no guarantee of superior performance.
Colin Hawtin, head of policy at Lautro, said it planned to draw up marketing rules to ensure that proprietary companies using the word mutual in their names do not mislead customers. He added that he did not think Scottish Mutual's use of the word was an issue for investor protection. 'We don't think Scottish Mutual is misleading the public. We don't think the consumer knows what mutuality is,' he said.
Lautro's research was conducted by Professor Bob Carter of the University of Nottingham School of Management. He surveyed insurers and commissioned consumer research. Stephen Phillips, marketing manager of National Mutual Life, which protested about Scottish Mutual's name, said: 'We should make sure that people do understand what the word mutuality means.'
Chris Davidson, compliance officer with Scottish Mutual, said the company wanted to keep the name because it was known to financial advisers. He said the company's marketing literature makes it clear it is a proprietary company.
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