Royal London profits double after rule changes

Phil Loney of Royal London. Picture: Contributed
Phil Loney of Royal London. Picture: Contributed
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SCOTTISH Life parent company Royal London has predicted a further upturn in business in the coming months after a regulatory overhaul helped its first-half profits more than double.

The UK’s largest mutual life and pensions firm said sales had been boosted by auto-enrolment, which compels employers to provide pension schemes for their staff, and rules banning the payment of commission to financial advisers.

Pre-tax profits at the group, which has about 1,200 staff and 270 outsourced workers in Scotland, surged to £226 million for the six months to 30 June, up from £110m a year earlier.

Funds under management rose 3 per cent to £51.1 billion and are set to swell to about £70bn after the £219m acquisition of the Co-operative Group’s fund management and life insurance businesses completed at the end of last month. That deal has given Royal London an extra two million customers, taking its total to about six million.

Chief executive Phil Loney said: “Despite a difficult UK market, I believe the long-term prospects for our business remain positive.”

New business sales at Scottish Life grew 26 per cent to £1.5bn, driven by a 54 per cent leap in group pensions business to £554m, while individual pension sales rose 12 per cent.

A spokesman said the group expects to pick up a sizeable chunk of new business through auto-enrolment, but some of the largest employers on its books have deferred implementing the new regime while they update their payroll systems.

“The real value will begin to feed through in the third and fourth quarters and the early part of next year,” he added.

Rival Standard Life has predicted it could attract up to 400,000 extra scheme members through auto-enrolment, but Scottish Life did not give an estimate of how many it could win.

Royal London said sales had also been driven by the retail distribution review (RDR), which came into force at the turn of the year, as advisers were seeking the best products and service, rather than the firms that paid the most commission.