He has a background in banking, having worked for Lloyds TSB for many years, and has also worked in private equity, on mergers and acquisitions, and made a bid for Project Verde, the former Lloyds Banking Group branches.
After becoming “disillusioned” with retail banking, Mr Markey has decided to bring his corporate expertise to financial mutuals.
He said: “A modern mutual takes the best of mutual values and matches these to the commercial capabilities of the corporate. Providing you can run the mutual efficiently as a proper business, you should be able to put the value that you don’t pay to shareholders back into the proposition to the customer.”
As chief executive of Family Investments – which formerly focused mainly on child trust funds and now junior Isas – he oversaw the merger with the smaller Engage Mutual, the provider of life cover and other products for the over 50s.
The result of the merger is the creation of One Family, of which the head office is in Family Investments’ base in Brighton, East Sussex, and the strategic plan is to cater for a wide range of financial needs at certain flashpoints in the family lifecycle.
Mr Markey said: “Since 2008, families have been impacted by a huge amount of change – they come under pressure at various stages of their lifecycle: education is more expensive, getting onto the housing ladder is more difficult, pension provision is more difficult to provide for than it has been, and long-term care has come under pressure.
“Each one of these things is where families come together to make decisions. The banks have been repairing their balance sheets and have pulled out of a lot of the product groups that families find valuable, such as first-time buyer mortgage.
“There is a gap between what families need and what institutions provide. We believe One Family is able to fill that gap.”
There is a gap between what families need and what institutions provideA large part of Mr Markey’s strategy is to build the business by spotting niches where other mutuals operate, and, where appropriate, make an acquisition.
He said: “There are 151 financial mutuals in the UK; 80 per cent of the assets are owned by the top five. So there’s a very long tail, and towards the end of that tail they can’t possibly have the scale to generate the profitability to reinvest in their organisation.
“Smaller organisations have to live by the same rules as the larger ones. The cost of doing that is high, so that is a burden.
“All successful organisations will be interested in looking at the M&A market for suitable opportunities. We believe consolidation is inevitable in the market we operate in, and it offers particular capabilities to enhance our product range.”
When asked if any of those mutuals in the “long tail” offer the kind of product range and acquisition prospects he is seeking, he says a confident “yes”.
For the M&A expert, who spent some time studying the Co-op Bank as a rival to its bid for Project Verde, it was this ambition that lay behind the merger with Engage Mutual (although Engage’s chief executive has left the combined business for personal reasons).
The deal was announced in September last year, and the new organisation was officially launched in April. The deal makes the mutual the UK’s number three in terms of customers (2.5m) and top five by assets under management (£7bn). The merger means that the organisation now covers two different aspects of a family’s needs – saving for children and older people’s insurance.
A big focus for Mr Merkey next is equity release. He explained: “I don’t think the products that are provided in the current market are that centred around customers’ needs, and there is an opportunity to provide something in this space which is differentiated. I think a mutual is well-placed to do that.”
Mr Markey joined Family Investments in 2012, after being headhunted. He is a chartered banker, and worked in Lloyds TSB for just over 20 years. He started out on the management development training scheme straight from school, and rose through the ranks to become head of savings, until attaining his final role of director, customer and sales.
He said: “I got the best out of retail banking where they put the customer at the centre of banking. The banks lost their way in the mid-2000s with the sales culture, with PPI and precipice bonds.”
Of the banks’ behaviour after the financial crisis, he says: “I think they have learned their lesson and they are getting back to operating their business against the right value sets. However, trust will be hard to re-establish, and I’m sure all of them have got huge PR campaigns.
“But it is not a quick fix. All of the major institutions recognise this and are looking to build that trust back.
In the mutual world I think that trust is largely inbuilt. Mutuals have weathered the storm of the financial crisis better, because their purpose is to look after their members who are their customers.”
Melanie Tringham is features editor of Financial Adviser
Simon Markey’s career ladder
2015
Chief executive, One Family
2012-2015
Chief executive, Family Investments
2012
Operations director, Tesco Bank
2011-2012
Programme director, NBNK Investments
2009-2010
Chief executive, consumer, Marsh
2005-2009
Managing director, Lifestyle Services group
2004-2005
Director, customer and sales, Lloyds TSB Group
2003-2004
Telephony director, Lloyds TSB Group
2001-2003
Head of group customer offers, Lloyds TSB Group
1999-2001
Head of savings, Lloyds TSB Group
1998-1999
Senior manager, operations), Lloyds TSB Group
1997-1998
Group manager, Lloyds TSB Group
1984
Joined Lloyds TSB group on group management training programme, assuming various roles including business sector manager
