Interview: Fiona McBain, chief executive of Scottish Friendly Assurance

Fiona McBain, chief executive of Scottish Friendly
Fiona McBain, chief executive of Scottish Friendly
Share this article
Have your say

SHE’S a seasoned professional with a string of awards and accomplishments to prove it, but Fiona McBain is also ever so slightly
superstitious, writes Kristy Dorsey.

Eleven months into the financial calendar, the head of Scottish Friendly Assurance knows fine well her Glasgow-based mutual is on course to post another good set of annual figures. Even so, she hesitates when asked whether 2012 will prove to be a fourth consecutive year of double-digit sales growth, lightly rapping her knuckles on the desk in her Blythswood Square office.

“Well, I am smiling,” she concedes. “You’re right, I can’t go into too much detail – the year isn’t finished, the
report doesn’t go to the board until April, things could still happen – but I would hope, well, it would not be unreasonable to say that we are on track to do that again.”

Though perhaps overly-circumspect, her caution seems for the most part prudent, given the seismic and frequently unforeseen shocks that have blasted from the financial sector into the wider economy in recent years.
Scottish Friendly has navigated the turbulent waters in what McBain likes to describe as a “speedboat” organisation – small enough to change course quickly, making swift decisions in rapidly-changing circumstances. Under her leadership, it has expanded to become the largest Scottish-headquartered mutual life office in the country, posting a 20 per cent surge in life and pension sales last year.

Of course, with £808 million of
assets under management at the end of 2011, Scottish Friendly is still dwarfed by mutual rivals such as Scottish Provident and Scottish Life, owned by the southern-headquartered Royal London Group.

But McBain has already led Scottish Friendly through one period of rapid growth, capping off her first two years as chief executive with the completion of three mergers in 2007.

The largest of these was the acquisition of Glasgow rival Scottish Legal Life, which in a single stroke expanded
operations by one-third.

Acquisitions came to halt after that, with Scottish Friendly pouring much of its attention into expanding its administration business for “wrap” investments – a platform that allows different pots of investment money to be managed from a single account.

That business, built from scratch from 2006, proved a huge success and was sold to the Citi subsidiary of US giant CitiGroup last year in a deal reportedly worth tens of millions of pounds. The deal took with it 134 staff from Scottish Friendly, whose operations are now run by 90 employees working from a single office.

However, McBain signals that the five-year acquisition hiatus is at an end. Though undoubtedly a small deal, last week’s agreement to take over the operations of Royal Standard Friendly Society looks to be a sign of more to come.

“The third part of our strategy for growth is mergers and acquisitions,” she says of the mutual’s plans. “With all the pressures going on in the market, we expect there to be more consolidation, and that is something we are looking at.”

McBain says increasing regulation is bringing heavy cost pressures upon smaller financial service providers, which must adhere to the same requirements as organisations selling much larger investment products. Scottish Friendly keeps a keen eye on expenditure – its renewal costs are among the lowest in the UK – but the pressure is pushing in one direction only.

“With everything that has happened in the financial sector, I understand the need for better regulation, but it has got to be proportionate,” she says.

“For a small to medium-sized business like Scottish Friendly, the overheads are just going up and up, making it more difficult to provide low-cost products that encourage lower earners to save.”

An ardent campaigner for the need to save – and the need for government to make it easier to save – McBain makes no apologies for catering to those with less money to set aside.

Scottish Friendly’s newest product, the My Choice Isa, is aimed at bringing the tax-free benefits of investing in stocks and shares to a wider market. It starts from only £10 per month, which would not yield enough for a retirement, but McBain points out that many choose to increase their contributions as they go along.

“We are trying to encourage people to save,” she says, “but many of them don’t have a lot of spare cash, especially in the current climate.

“If you say to people that they have to start saving right now, and it has to be at least £100 per month, a lot of them switch off and say they can’t possibly do that, so they do nothing.”
The new Isa product, with further variations planned for next year, is another strand of Scottish Friendly’s growth strategy. The 150-year-old group is also increasingly capitalising upon e-commerce, reporting a record level of £524,000 in online sales last month.

Having successfully built an IT platform that impressed the likes of Citi, Scottish Friendly’s other major avenue for expansion centres on working with the industry’s bigger players.

Scottish Friendly already provides larger organisations such as Aviva and Pearl with so-called “white label” products – tax-efficient investments that only mutuals may administer, but which are sold under the partner’s name. The Glasgow group’s ability to quickly put together the systems for launching new products has additionally opened up opportunities to manage the sale and organisation of investments set up by the bigger players.

McBain concedes that the Citi deal played a major part in developing these latter lines of business.

“It has given us a credibility that has allowed us to go on and do other things,” she says. “People are willing to speak to us and work with us.”

60 second CV

Born: 1961, in Glasgow.

Education: Studied maths and psychology at Glasgow University before going on to train as a chartered accountant with Arthur Young in London.

First job: Working behind the counter at a newsagent’s at the age of 14.

Car: Audi A5.

Kindle or book? I ‘am’ a Kindle now. I never thought I would be, but I am.

Can’t live without: My iPad. I am now a convert, and it has changed my life.

Favourite place: Sydney.

What makes you angry: Incompetence and bureaucracy.

Best thing about your job: Delivery. I am really proud of what we have achieved.