Royal London, the mutual insurer that owns Scottish Life and employs 1200 in Scotland, has reported a 13% uplift in new business profit for 2012 and a 25% rise in capital surplus.

New chief executive Phil Loney says the group is well-placed in the new commission-free advice world, and can deliver "a strong and meaningful mutual alternative in the UK life and pensions and asset management markets".

The group's total new business was up 7% at £3.52 billion and its regulatory capital rose to £2.37bn.

Mr Loney, reporting on his first full year in charge, said: "All of our main trading businesses have been growing, margins have remained strong... new business profits are up on the year and that is the real indicator of trading performance."

He said the recent acquisition of the Co-operative's with-profits fund and asset management business was "a real game-changer", taking assets under management from £50bn to £70bn. He said: "We think that is going to help us compete better in the UK market because we can spread our overheads over a bigger business."

He said Scottish Life already had good support from IFAs with its non-commission model and the new advice regime should only boost that further.

Royal London, Mr Loney added, had "a great workforce in Edinburgh" and the efficiencies from the Co-operative deal could only help its Scottish operations compete more effectively.

The current year had started well in pensions, but the market would not settle down until the effect of disappearing commissions had worn off, Mr Loney said. For IFAs in future, "if you are dealing with a life office where administration is poor and it is losing you clents... we hope to be a beneficiary of that".

Policyholders in the closed Scottish Life with-profits fund are seeing annual bonuses held this year across all endowments and pensions, after the fund made a return of 6.6% last year. The Royal London fund made a return of 8.6% and the group has added a "mutuality bonus" of £88 million to its policyholder returns, the same as for 2011

Mr Loney also warned that the regulator should not over-react to the dangers of overcharging by advisers, for those automatically enrolled into workplace pensions.

The Herald reported last month how the Financial Services Authority has approved 'consultancy charging' for corporate pensions, which allows potentially large deductions from the pension pots of automatically enrolled low earners, yet has no mechanism to regulate the advisers.

Last week a Which? mystery shopping report found two insurers willing to enlist an adviser proposing significant charges which, according to pensions campaigner Dr Ros Altmann, could "decimate" a worker's pension.

Mr Loney said the Department for Work and Pensions was examining the issue. He said: "The important thing is they don't throw out the baby with the bath water. What we need is a very transparent approach that allows employers to pay an IFA, and where there is real value being delivered by the IFA for employees, for them to contribute to that."