Case No. IP-2016-000182

91.The identity of the relevant public was not discussed but I should say something about it. It seems to me to have included anyone interested in a financial product. Damage would only be caused by the redirection of sales among members of the armed forces or the dilution of goodwill in their minds. So I will take the relevant public to be members of the armed forces, all of whom were probably interested in one financial product or another, if only military kit insurance.92.Another matter not much explored was how those in the armed forces in April 2016 would have learned what a mutual is, to the extent that they did. I will assume those who were sufficiently interested became informed by activities such as reading documents provided by a mutual to which they belonged, seeing and hearing items on the broadcast media and on the internet, reading articles in the print media, or speaking to others who have done such things.93.There was a point of evidence which in my view had to be kept firmly in mind. Even if MML were able to show that financial mutuals were invariably owned by some or all of their customers, that would not have been enough to establish their case on the meaning of ‘mutual’. It would be still have been consistent with there having been only a single broad meaning together with a further understanding on the part of the relevant section of the public that to date financial mutuals had always been owned by their customers. MML had to show something more: the existence of the second narrower meaning. MML bore the evidential burden of showing that Forces Mutual would not merely have been recognised as an exception to the usual pattern that financial mutuals tend to be customer-owned. The regulatory structure 94.A starting point is to consider is whether it would be lawful for a financial organisation to style itself a ‘mutual’ where it is not wholly or partly owned by its customers.95.The Financial Conduct Authority (“FCA”) regulates all financial organisations in the UK. The FCA maintains a public register of mutuals. Its website at www.fca.org.uk states:“The Mutuals Public Register is the public record of registered mutual societies:• building societies • credit unions • friendly societies •registered societies”96.The website refers to the entry into force on 1 August 2014 of the Cooperative and Community Benefit Societies Act 2014. This is on a page which explains what a registered society is:“ ‘Registered societies’ include:• co-operative societies – businesses that are run for the benefit of their members, distributing profits between their members • community benefit societies – businesses that are run for the benefit of the wider community, re-investing profits in the community •‘pre-commencement societies’ (industrial and provident societies, registered before 1 August 2014)”97.As appears from the website, community benefit societies are financial mutuals which are not run for the benefit of customers, but for the benefit of the wider community. So far as I was shown, the website is silent as to the structure of ownership of building societies, credit unions and friendly societies. But it is in any event clear that the regulatory structure in this country does not require a financial mutual to conform to MML’s narrow definition of that term. The dictionaries 98.MML relied on several dictionary definitions:(1)An online ‘Oxford Dictionary’ included this definition of ‘mutual’:“Denoting a building society or insurance company owned by its members and dividing some or all of its profits between them.”(2) A Merriam-Webster law dictionary included this:“of or relating to a plan whereby the members of an organization share in the profits and expenses; specifically: of, relating to, or taking the form of an insurance method in which the policyholders constitute the members of the insuring company”(3)The Macmillan dictionary had this:“[ONLY BEFORE NOUN] BUSINESS a mutual insurance company, building society etc is owned by all of its customers, who share its profits”(4)These were from the Collins English Dictionary:“If a building society or an insurance company has mutual status, it is not owned by shareholders but by its customers who receive a share of the profits.”“denoting an insurance company, etc, in which the policyholders share the profits and expenses and there are no shareholders.”“If a savings and loan association or an insurance company has mutual status, it is owned by its customers. Mutual companies are owned by the policyholders, while stock holders own stock insurance companies. A mutual insurance company has no formal stockholders or capital stock, and is owned by its policyholders. If a savings and loan association or an insurance company has mutual status, it is owned its customers.”(5)The Cambridge English Dictionary has this definition of ‘mutual’:“a financial organisation that is owned by its members, rather than by shareholders”(6)The online Free Dictionary has these definitions of ‘mutual insurance’:“An insurance system in which the insured persons become company members, each paying specified amounts into a common fund from which members are entitled to indemnification in case of loss”“(Insurance) a system of insurance by which all policyholders become company members under contract to pay premiums into a common fund out of which claims are paid.”99.There is a consistent message that emerges from these dictionaries: an insurance company with mutual status is owned by its customers. However, they imply that a mutual insurance organisation is owned by all its customers. The Macmillan Dictionary is explicit about this and that I think that it is the impression that would have been conveyed to a casual reader of the other dictionaries. That interpretation of a financial mutual is not the same as MML’s definition, but a subset of it.100.That said, it was not clear that the relevant public would have been much guided by dictionaries and other evidence suggested that they would have considered the possibility of variations on the dictionaries’ definitions. The witnesses 101.The evidence on what variations and exceptions might have been contemplated came mostly from Mr Shaw. He is the Chief Executive of the AFM. He discussed the ownership models adopted by financial mutuals in this country. Mr Shaw was unequivocal in his witness statement (paras. 10-12):“Mutual organisations are owned by their customers. In the UK this includes mutual insurers, friendly societies, building societies, credit unions and co-operatives. Mutuals may have their own unique structural form, established by statute, such as the Friendly Societies Act 1992.…Customer ownership is the key factor in mutuality. The owners (‘Members’) are the reason the mutual exists and are its primary concern.”102.In cross-examination Mr Shaw was less dogmatic, or possibly he had been using language more loosely in his witness statement than at first might appear.103.Mr Shaw accepted that his evidence was based on organisations belonging to his association, the AFM. He also conceded that this excluded credit unions, building societies, community benefit societies and cooperatives. In fact, about three-quarters of the organisations which Mr Shaw identified as financial mutuals are not members of the AFM.104.Mr Shaw said that financial mutuals are generally, so not invariably, owned by their customers. He identified several mutual health insurers which are not owned by any of their customers. It emerged that even among the membership of the AFM there are organisations which call themselves mutuals and which are not owned by their customers.105.The AFM has a website. Mr Silverleaf referred me to the first page:“Mutual organisations are owned by members – usually their customers.”106.I think the word ‘usually’ would convey to any reasonable reader of that page that mutuals might not be owned by their customers. Later the website explains in more detail:“What is a mutual? Mutual insurers, friendly societies and building societies – they are all owned by you! These days the mutual sector is very diverse and includes: • Housing Associations • Clubs • Credit Unions • Employee owned bodies • Specialist bodies: such as football supporter trusts and community mutuals There are also lots of new mutuals in the public sector such as: • NHS Foundation Trusts • Leisure Trusts • Co-operative Schools • Community Housing Schemes The mutual philosophy is built on a sense of ownership, ‘belonging to an organisation’ and trust. As mutuals are owned by you, their customers (members) and have no obligation to shareholders they are free to focus entirely upon their customers’ needs.”107.Where the AFM website states in that last paragraph that mutuals are owned by ‘customers (members)’, this is clearly being given a loose meaning. Apparently the term ‘customers’ embraces members of clubs, employees, football supporters, taxpayers who have a stake in NHS Foundation Trusts, parents of children who attend co-operative schools and the children themselves, those who live in community housing schemes and no doubt many other categories of ‘customer’. This raises the possibility people closely involved with mutuals, such as Mr Shaw, tend to use the word ‘customer’ loosely.108.The only unifying theme in AFM’s definition of a mutual is that it has no shareholders. A mutual is instead owned by stakeholders of various kinds with an interest in or some connection with the trust, who are described as ‘customers’ or alternatively ‘members’ of the trust. The meaning of ‘mutual’ adopted by the AFM, an organisation which is all about financial mutuals, is in fact the single broad meaning given to mutuals generally. I was not shown any part of the AFM’s website which suggests any second, narrower meaning.109.There was in evidence a paper by Dr Ruth Yeoman and Dr Daniel Tischer called Reframing Building Societies and Mutual Insurers: Collaboration as a source of competitive advantage, published under the auspices of Kellogg College Oxford. Mr Silverleaf had earlier relied on the introduction, which described the benefits of mutual financial services and said that the competition they contribute“…through their different, customer-owned form adds to the financial stability of the market as a whole…”110.Mr Shaw was taken to other parts of the paper. It said this about the interview which the authors had conducted among those who work in building societies and mutual insurers (at p.63):“While the term mutuality is widely used within the sector, there is no generally accepted definition of the term, therefore interviewees were asked to articulate what mutuality meant to them. … • It was clear from the interviews that the meanings and practices of mutuality, and how these apply to financial mutuals, is the subject of ongoing inquiry and debate in the financial mutuals sector.”Mr Shaw agreed with statement in the bullet point.111.Mr Shaw was also referred to a survey conducted by BDRC Continental on behalf of the AFM using a nationally representative sample of 2000 respondents. 22% of the sample had no idea at all what a mutual is. The other 78% had various ideas. The survey did not suggest any detailed consistent understanding.112.Significantly, Mr Shaw said that customers buy products from a financial mutual because it is the best on the market or suits their circumstances best and that they retain their membership because of tangible benefits such as consistent pricing and getting something back. The ownership structure of the mutual is apparently of little if any concern.113.Mr Gilbert gave several examples of financial companies that have traded under a name including ‘mutual’ and which are not owned by their customers, such as the Old Mutual Group. All the companies in that group are public limited companies owned by shareholders. Mr Gilbert and Mr Mann both said in cross-examination that generally, so not invariably, a financial mutual is owned by some or all of its customers. Mr Gilbert agreed that a key characteristic of a mutual is that it has no shareholders. Conclusion on the meaning of a financial ‘mutual’ 114.In my view the evidence as a whole showed that in April 2016 most of the relevant public had some notion of what a mutual is, though not the same notion in every case. The term conveyed something positive to them. It is likely that some believed that a mutual has no shareholders, though it is hard to say what proportion.115.The evidence did not support a belief that financial mutuals are invariably owned by some or all of their customers. Indeed, that is not always the case. It did not support the suggestion that the relevant public have two distinct understandings of the term ‘mutual’. ‘Mutual’ was given only the one broad meaning. If there were members of the armed forces who in April 2016 thought that financial mutuals are always owned by some or all of their customers, this would have been seen as nothing more than a general pattern thus far among mutuals. It would not have influenced their understanding of the term ‘mutual’.116.Moreover, to the extent that when used in the context of a financial organisation ‘mutual’ implied anything about its ownership, the understanding would have been hazy because it would not have mattered much to the relevant public.