Police in line for windfalls over merger

By RICHARD DYSON, MAIL ON SUNDAY DEPUTY PERSONAL FINANCE EDITOR
Updated:

Police Mutual, the third-biggest friendly society, is planning a merger with its smaller rival, the Metropolitan Police Friendly Society.

The organisations together serve 225,000 members of the police force and their families.

The proposed tie-up would trigger windfalls 'in the low hundreds of pounds' for 20,000 members of the MPFS, which serves London's police force.

The merger would bring cost reductions and an end to the competition between the two societies, both boards argue. They insist that neither is in financial difficulties.

Members of both societies will be consulted on the deal in coming months. At least 75 per cent of voting MPFS members would need to support the deal.

Joining forces: Friendly societies are in talks

Joining forces: Friendly societies are in talks

This is in contrast to the mutual building society sector, where several recent mergers have been forced through without ballots and windfalls.

Police Mutual chief executive Stephen Mann says: 'Our presence in London has been growing and MPFS already has a successful business there. The merger would benefit both societies' members.'

It could mark the beginning of a flurry of consolidation in the sleepy friendly society sector. This is made up of 110 mutuals, mainly set up in Victorian times, many of which limp on with declining memberships and profits. Increased regulation in the wake of the financial crisis is expected to push up costs.

The sector's last merger saw ailing Hearts of Oak rescued by Reliance Mutual in 2007. That same year Royal Liver, the second-biggest friendly society, entered merger talks with giant mutual insurer Royal London, but no deal was struck.

Meanwhile the administrator of Belfast's Presbyterian Mutual Society, which collapsed in November, has written to its 10,000 members delaying the date at which he was hoping to indicate how much of their money might be returned.

PMS is structured in an unusual way, which exempts it from ordinary regulations and protection, so help is at the Government's discretion.

The society's assets are thought to be worth £100million less than the £300million owed to members.

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