We've let you down

By RICHARD DYSON
Updated: 05:35 EST, 24 January 2005

BELEAGUERED bosses of Standard Life face their toughest test - winning the trust of disillusioned savers to back demutualisation. And they were confronted with a withering protest last week.

'We can never believe anything you say ever again,' chief executive Sandy Crombie was told by Steve Huxham of internet-based lobby group the Investors' Association.

It set the stage for a round of hostile questions that had the giant mutual's chiefs on the back foot and led to a humiliating admission from Crombie:

'I've been in my job for one year and for all that time I have been admitting that mistakes were made. I am not afraid to say that our strategies have been proven wrong.'

With 7m customers worldwide, Standard's directors have set themselves the huge task of persuading the people who control the business - its 2.6?illion with-profits policyholders - that drastic change cannot be avoided.

But the members are so incensed at the way their savings have suffered they are in no mood to listen.

In fact, many policyholders believe that Standard's bosses are directly to blame for the dismal performance. And they are voicing their fury in a series of roadshows at which the directors are meeting policyholders.

The latest and most confrontational roadshow was staged last week at the Moat House hotel in Elstree, Hertfordshire, where 200 policyholders gathered. Facing the bosses were Huxham and other well-known opponents of Standard's board such as David Stonebanks, who campaigned without success to demutualise the insurer in 2003. Huxham set the tone with his outspoken challenge to Crombie, claiming that the chief executive had no support and was unfit for the job. He asked if the board would be 'the biggest carpetbaggers of all' because of extra pay and shares the directors stood to pocket from demutualisation.

More hostile questions followed, with policyholders demanding apologies for poor investment returns and for the U-turn in January 2004 when the plans to demutualise were unveiled.

'You do not admit any wrongdoing,' said one. 'That is a failing.' As the audience applauded, he continued: 'You should have prefaced your remarks with an admission of error. Your presentation is glossy, superficial and very, very arrogant.'

Crombie promptly voiced his apology - and Stewart agreed. 'Unequivocally, at times, we got things wrong,' he said. Crombie explained that the demutualisation, due for 2006, was taking so long because the company needed a full year's successful trading to persuade City investors to buy shares when the company floated.

Quizzed on poor investment returns, Australian Trevor Matthews, who joined the board last year to run the UK operation, jokingly suggested that policyholders put more money in Standard's new self-invested pension.

It did not go down well. 'It's due to you people that I don't have any money left to save for a pension,' shouted a woman in the audience.

But the board was not without support. 'Endowment policyholders are partly to blame for their own predicament,' said one policyholder, 'because they should have saved money when mortgage rates became cheaper.'

The comment sparked uproar and chairwoman Alison Mitchell, a former money expert for BBC radio, struggled to restore order.

For demutualisation to succeed, Crombie must win the support of more than 75% of those who vote. Held today, a vote might well fail. The policyholders at the roadshow were asked to fill in questionnaires prepared by Standard Life.

According to the results, 61% supported the move to demutualise. And 69% rated the roadshow either 'good' or 'excellent'.

The next two events will be held in May at venues to be decided.