‘Covid Savings’ boost demand for alternative financial providers
After a year of consumer saving, the Association of Financial Mutuals (AFM) says its societies have received a healthy boost in interest as people continue to save post-lockdown restrictions.
Financial mutuals, which provide an alternative to mainstream banks, are seeing an increasing number of consumers looking to use their services.
After a groundbreaking year of saving in the UK, with consumers putting away £184bn*, these new-found saving habits are continuing, but not in the traditional way. People are now looking to move away from banks which are known for investing in some of the less-than-desirable industries, such as fossil fuels and tobacco.
So far this year, Foresters Friendly Society, a mutual provider and member of the Association of Financial Mutuals, has reported a single premium income increase of 132%. With products including the Foresters stocks & shares ISA , Investment Bond, Lifetime ISA and Junior ISA contributing to the increase, consumers looking for an alternative way to invest their money have helped mutuals grow over the last year.
Savings from younger people have particularly seen an increase with Foresters Friendly seeing a 201% increase in new members taking out Lifetime ISAs (LISAs).
Lifetime ISAs are available for 18 to 39 year-olds and savers can put in up to £4,000 per year, with the government providing a boost of 25% per year, up to £1,000.
Designed to help young people save for their future, whether that be a first home, or pension. The products available include ethical and green options making the Lifetime ISA particularly attractive to young people that are looking for something more from their savings.
In a recent survey from AFM, 30% of young people said that finding a financial provider with a strong ethical track record is one of the most important factors to them.
Mutual societies and friendly societies have long standing sustainable credentials and were built on principles of supporting the community, making them a trustworthy alternative to more mainstream providers.
Sally Waterfield, Head of Marketing at Foresters Friendly Society, said: “While many people have faced greater debts, redundancy, or reduced income during furlough, others have seen their financial position improve and, as a result, millions of people have saved significant sums of money during the pandemic.
“At Foresters Friendly, 2021 has been a record year for new business as the risk and uncertainty highlighted by Covid meant that many consumers were keen to build a financial cushion. It is pleasing to see increases across our entire product range which demonstrates that people of all ages, from cradle to seniors, are taking proactive steps to ensure their future financial stability.
“As a mutual provider, we are keen to demonstrate our ethical values in all that we do. To outline Foresters’ commitment to responsible investment, we are proud to be a signatory to the Principles for Responsible Investment (PRI). So, whilst it’s great seeing all age ranges including young people take care of their financial future, it’s also refreshing to know they are conscious of where their savings are being invested.”
Martin Shaw, CEO of the Association of Financial Mutuals, said: “AFM and all its members are committed to providing trustworthy ways to save. We are dedicated to investing in sustainable and ethically conscious funds that benefit our members.
“Our societies have long standing sustainable credentials and are built on the principle of supporting the community and their interests, and this is what people are drawn to.”