Scottish Friendly more positive as 12% sales growth is revealed

SAVINGS and insurance mutual Scottish Friendly – which became Scotland's largest mutual society on the collapse of Dunfermline – announced growth in sales of its savings products in 2009.

The Glasgow-based firm saw sales grow 12 per cent in 2009 to 8.7 million. Its core "regular premium business", which includes the ten-year tax-free savings bonds unique to friendly societies, grew 4 per cent to 5.6m.

The firm said it had "reaped the benefits" of its partnership programme with the likes of Aviva, insurer Pearl (formerly Resolution) and Readers' Digest. The firm also offers bonds to fans of Rangers and Celtic football clubs through its partner, Glasgow-based Soccer Savings. No new partnerships were announced last year.

The firm launched a new saver programme, the Scottish Bond Plus, which allows maturing ten-year savings bonds to remain with the group.

Figures on funds under management will not be available until the society releases its results later in the year. Last year the society's investments were badly hit by market turmoil, dropping to 704m from 834m in 2007. This resulted in a number of savers seeing little return or even small losses on their maturing ten-year bonds in 2009.

Calum Bennie, marketing manager for Scottish Friendly, said returns on customer bonds would come back to form: "Over the last year, as with all life companies and with most investments, investment values fell because of the falls in the stock market. Bonus levels did fall last year and many customers were affected by that.

"We are not expecting that this year. The stock market has recovered some ground and payouts will recover this year."

Bennie said there has been a "sobering up" in the UK as people try to cut spending and save. He also said people were more "realistic" about returns on savings, making the tax-free friendly bond more attractive.

Further consolidation in the industry is expected as smaller friendly societies close to new business.

The societies face falling levels of capital and rising costs of acquiring new customers, while the 25 maximum per month savers can invest hasn't risen in more than14 years.

In the past, Scottish Friendly has been a consolidator, but its last acquisition was at the start of 2008.

Scottish Friendly was part of a consortium interested in acquiring the savings book of the Dunfermline Building Society, which ended up being taking over by its English rival, Nationwide.

Bennie said the firm had "nothing in the pipeline" regarding potential acquisitions, but added: "We continue to be vigilant for any new merger opportunities that arise."