Carpetbaggers pressure Scottish Provident

Scottish Provident is under pressure to change

Talks are being held which could pave the way for Scottish Provident to demutualise, triggering windfall payments for thousands of policy holders.

The Edinburgh-based firm, which has been performing poorly, is the latest to be targeted by carpetbaggers.

Its board promised at the end of March to give "full consideration" to calls from a group of internet-based policy holders to demutualise.

Scottish Provident

Founded 163 years ago

Manages assets worth £10.5bn

Employs more than 2,500 staff across Britain, Ireland, the Isle of Man, Spain and Greece

750,000 policy holders, but only 400,000 mutual members would receive windfall payments

Edinburgh businessman Gordon Hart, backed by 28 others, has met company chiefs to discuss the demand for a change of status.

The firm acknowledged the pressure on it by announcing it had appointed consultants to look at its options.

Managing director, David Woods, said: "Given the degree of recent speculation, we thought it appropriate to inform members now.

"We would expect this review to review all of the options that are open to us. We have no fundamental objections to anything."

The members calling for demutualisation said they were not interested in the short-term gain from a windfall but hoped it would help offset the under-performance of their endowment policies.

Concern over mortgage shortfalls

There was great concern that mortgage repayment shortfalls would be the result of the poor return on their investments. Mr Hart said he was disappointed the firm was only going ahead with a review and had not allowed a free vote on demutualisation.

"They just don't want to listen to their members. They've got their heads in the sand," he said.

In a letter last week, Mr Hart demanded a vote, warning that many members were angry at low bonuses.

"Demutualisation offers policyholders, like myself, a substantial windfall payment, which in many cases, will offset the under-performance of their endowment policies," he said.

Some 400,000 Scottish Provident members could receive windfalls of about £2,500 pounds each.

At the end of last year, Scottish Widows voted to abandon its mutual status by selling out to Lloyds TSB.

Decision soon

Some members reaped windfall payments of up to £100,000. The change in such an institution boosted the morale of carpetbaggers throughout the UK.

A few months later, Standard Life came under attack from the Monaco-based businessman Fred Woollard.

The Edinburgh giant dismissed the resolution saying it was committed to mutuality.

Scottish Provident is expected to comment on its review by its annual meeting on 30 May.