Anthony Hilton: Standard life finds that honesty pays

As someone who thought Standard Life would never make it to the stock market it is only right that this column should acknowledge the achievement behind its successful listing this week.

That the shares were oversubscribed is a singular PR achievement - it mobilised its members to cough up more money for shares (to add to the ones they were getting for nothing).

What in turn made this so remarkable was that in the past five years, Standard Life has given its members more reason than most to distrust, if not actively dislike, the firm. First it encouraged them to vote in favour of continued mutualisation (against those who advocated for it to go public).

This was of itself a reasonable act, but not in the context of what followed, because Standard Life then misread the stock market, and failed to realise the impact this would have on its financial strength as measured by the Financial Services Authority.

The result was a clash with the regulator, a U-turn on investment policy and a disaster for the company. The bulk of the capital needed to preserve and support the group's mutual status was lost in the ensuing stock market and regulatory debacle.

The result for members? The company decided it had to go public to replenish its capital, but members were give windfalls barely a quarter the size of those they had been advised by management to turn down earlier - and the bonuses on their savings policies were slashed. They therefore  had little reason to feel warm about Standard Life, let alone back management with more money.

What turned this round was honesty. The new management sorted the business so losses were eliminated, and a coherent growth strategy was put in place. Then it got commentators and analysts to focus on the future by being brutally candid about the past. There was no attempt to be defensive or evasive. The off-the-record briefings about what really had gone on were almost embarrassing in their candour.

Gradually this healed the resentment. It created a climate where there was no point in commentators banging on about the past because the company admitted it had been a horror; the only story was the future.

Anthony Hilton is City commentator on London's Evening Standard.

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