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Mutual Life president says problems face financial services industry In his address to the comâ€" pany‘s l1i6th annual meeting, Jack V. Masterman, Mutual Life of Canada‘s president and chief executive officer, characterized the financial services industry as basically strong, but not without serious problems. ‘"Public conâ€" fidence in financial institutions, both here and abroad, is erodâ€" ing." Noting that public trust and confidence are of paramount importance, Masterman said, ... the demise of one institution ... can shake the public‘s conâ€" fidence in an entire industry. Unfortunately, there have been too many such events recently. Several trust companies and general insurance companies and two of Canada‘s chartered banks have been forced to close their doors. The current crisis in liability insurance has added to the problem." Investors view Canada‘s financial system with growing concern. ‘*Acting in a position of public trust is a rare privilege," he said. "If the trust proves to be misplaced, then the privilege should be withdrawn." At the same tim% there is more competition in the markets for financial services in Canada. "‘This has been of great benefit to customers. But there is a limit to healthy and vigorous competiâ€" tion, beyond which markets can become irrational. The liability insurance market over the past decade provides ample evidence of this." With heightened public expecâ€" tations, and intense competition among life insurance companies, banks, trust companies, and inâ€" vestment dealers, some compaâ€" nies seem "... tempted to set prices to increase market share, ignoring their expense levels and the investment yields on assets of acceptable quality. Loss leadâ€" ers are the result. Short term gains may be realized â€" but at the cost of excruciating long term pain if the financial instituâ€" tion becomes bankrupt." In this environment life insurâ€" ance companies operate while governed by legislation that has not had a complete revision since CHEESE BREAD Our own recipe made with 4 Ib. of REAL CHEDDAR CHEESE ;1 99 Reg. $2.29 a Because of our customers‘ requests and great demands, we are extending the special on our famous cheese bread ALSO AVAILABLE ... * Fresh Pizza, Pizza Dough and our own Special Pizza Sauce until March 22 /86 y y Z}“â€":-\:A %‘l Mon.â€"Fri. 10:00â€"5:30, Sat. 9:00â€"4:00 VERONA ITALIAN BAKERY 1932. In comparison with the banks with whom they compete and whose Act is updated reguâ€" larly, "... life insurance compaâ€" nies operate in a stifling environâ€" ment, forced to seek convoluted and costly ways to serve the broadening needs of the public." The situation is even more difficult for mutual companies than stock companies, which can form conglomerates. Masterman does not favour the conglomerate concept. ‘‘All financial institutions should be widely held."" And he is not alone in this belief. "The House of Commons Finance Committee chaired by Donald Blenkarn is in agreement, but is unwilling to roll back the situaâ€" tion." Also a supporter of this view is Gerald Bouey, Governor of the Bank of Canada. "A mutual company is merely one form of a widely held finanâ€" cial organization.‘"‘ He continued, ‘*Anyone looking for examples of customers benefiting from effecâ€" tive, widely held organizations would find them in the operations of leading Canadian mutual life insurance companies. These exâ€" amples should be kept in mind as current discussions develop into actions on several legislative fronts." In urging action on the legislaâ€" tive process and especially the updating of antiquated insurance legislation, Masterman exâ€" pressed his views on the paper issued by Minister of State for Finance Barbara McDougall. "I support that paper‘s principles on consumer protection, innovaâ€" tion and efficiency, financial soundness and stability, and esâ€" pecially harmony between federâ€" al and provincial policies."‘ Referring to the need for an overhaul of deposit insurance as long overdue, Masterman said, ‘"‘The existing system is an mviâ€" tation to trouble."‘ He noted that investors do not question the stability and strength of the financial institution with which they will be dealing because they know they will be fully compenâ€" sated if the company fails. The system is also a temptation to irresponsible managers who are 665 COLBY DRIVE Unit #6, Waterloo LARGE 16 oz. size ‘"Our Bread is Baked Not Manutactured" Whole Wheat High Fibre Bread Eight Grain Bread Made with 8 natural grains GARLIC BREAD (Also on special) ‘1.29 tempted to speculate. He noted that there was a gap in the present system. ‘"Customers of life insurers and general insurers are also entitled to some comâ€" pensation if their company fails." In any event, ‘"The two insurance industry organizations are committed to introduce priâ€" vately operated insurance proâ€" grams before the end of this EJ cR * Suggested sale price on 1985 Fuego group 2 MOG@I. rreignt. PDi, taxes & licence are extra. Produce of California Canada #1 Lettuce head «2 P Produce of Mexico Canada # 1 Field a Cucumbers 3/99 Produce of Ontario "C" Grade Mcintosh Apples _ w 1 ® Produce of Florida Canada #1 Pink Grapefruit 4 / Produce of Ontario I FIAMC Jeep | Easter Lilies e 2.2 litre F.1. engine e 5 speed man. trans. e power front disc brakes e intermittent wipers e power steering e inside liftgate release e rear window defogger e cargo area cover e tachometer e cruise control e electric sunroot 0 RENAULT 49 King St., St. Jacobs 664â€"3544 Gtahrecién John Toews Manager A Epecial / 4â€"5 blooms We bring quality to you committed to Special Stores u.. 59 1.98 4/51 4.95 Motors Inc. e trip computer e rear window wiper e Michelin steel beited tires * extra quiet insulation package e tinted glass L o li?ht group â€" e Blaupunkt AM/FM stereo cassette radio with six speakers year." While he applauds the governâ€" ment‘s willingness to raise the crucial issues, "... I must admit to some despair when I think of the ability of any government to act with dispatch." Masterman concluded, "The situation has reached the point where inaction is simply not an 60% Whole Wheat Bread 10« Assorted Tarts dor. Fruit Breads Chelsea Buns Egg Bread io« Carrot Cake Linda Frey Manager b64â€"3612 each [ the STONE CROCK . * digital clock ® adjustable steering column e full length floor console e leather wrapped steering e dual remote mirrors e sway bar â€" front and rear ® reclining high back bucket seats 1.19 4.19 2.89 2.69 1.19 4.35 4 doz. 2.39 394 Weber N. between Columbia & King, Waterioo 884â€"0290 09095° alternative.‘‘ Strong federal leadership, federal/provincial cooperation and consensus and legislative action are needed. "I hope, for the benefit of conâ€" sumers of financial services and the health of the entire system, that this can be accomplished soon. Mutual Life of Canada will certainly do its part in helping to make such action possible." 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