But Lakey is quick to highlight that LV’s name is “far better known” than the other companies he cited, and that its brand is particularly important still in the general insurance and car insurance space where Royal London doesn’t operate.
“My guess is that for two to four years, LV would remain independent. But then it would become absorbed.”
Lakey would hope the two remain separate on a branding front to at least keep an element of consumer choice. “Of course less competition means less intermediation.”
He used Australia as an example the UK pensions and insurance sectors should be trying to avoid, where just a couple of providers operate in each space.
“You’re no longer an independent adviser then. You’re now tied to some degree and the choice aspect has disappeared.”
Lakey is wary that a deal where shareholders are involved could see policyholders lose out to profit margins.
“Some firms can get too unwieldy,” said Lakey. “Not every merger works out well."
MP welcomes talks
Gareth Thomas, Labour MP for Harrow West, said he “welcomed” public confirmation of talks with Royal London.
Thomas said: “As talks with Royal London proceed the members of LV deserve to have access to all the facts about who will benefit, what current board members are getting from the deal and how much it’s all going to cost.
“The FCA [...] now need to ensure there are no non-disclosure agreements and all sides are open and candid about progress with the membership. The customer members who own LV deserve nothing less.”
ruby.hinchliffe@ft.com
