Office of Public Sector Information
(1) Subject to subsection (3) below, every friendly society which carries on long term business in the United Kingdom shall not later than the end of the relevant period appoint an actuary as actuary to the society; and whenever an appointment under this section comes to an end, the society shall as soon as practicable make a fresh appointment.
(2) In subsection (1) above “the relevant period” means—
(a) if the society is carrying on long term business on the day when this section comes into force, the period of one month beginning with that day; and
(b) if it is not carrying on long term business on that day, the period of one month beginning with the day on which it begins to carry on such business.
(3) The Commission may direct that a friendly society shall not be subject to the duty imposed by subsection (1) above if it considers it inappropriate that the society should be subject to it.
(4) A society making an appointment under this section shall serve on the Commission a notice stating that fact and the name and qualifications of the person appointed and that he has accepted the appointment.
(5) If an appointment under this section comes to an end, the society shall serve on the Commission a notice stating that fact and the name of the person concerned.
(6) A notice under subsection (4) above shall be served not later than the end of the period of 14 days commencing with the day on which the appointment is accepted.
(7) A notice under subsection (5) above shall be served not later than the end of the period of 14 days commencing with the day on which the appointment comes to an end.
(8) No person is qualified for appointment under this section unless he possesses qualifications prescribed by the Commission in regulations.
(1) Any determination of the value of any assets or the amount of any liabilities of a friendly society which is required for the purposes of any provision of this Part of this Act shall be made in accordance with regulations made by the Commission with the consent of the Treasury.
(2) Without prejudice to the generality of subsection (1) above, regulations under this section may provide that, for any specified purpose, assets or liabilities of any specified class or description shall be left out of account or taken into account only to a specified extent.
(1) A friendly society which is authorised under section 32 above to carry on long term business and which—
(a) is a society to which subsection 37(2) above applies; or
(b) is a society of a description prescribed by regulations,
shall, once in every period of 12 months, cause an investigation to be made by the appropriate actuary into the financial condition of the society in respect of its long term business.
(2) The first investigation into a society’s financial condition under this section shall be—
(a) in the case of a friendly society to which section 37(2) above applies which—
(i) is a registered friendly society that was authorised under the [S.I.1987/2132.] Friendly Societies (Long Term Insurance Business) Regulations 1987; or
(ii) is an incorporated friendly society which was formerly a registered friendly society so authorised,
an investigation into its condition at a date not later than 12 months after the date to which the accounts of the society were made up for the purposes of the last investigation under regulation 11 of those regulations;
(b) in the case of any other friendly society to which section 37(2) above applies, an investigation into its condition at a date not later than 12 months after the date on which it became such a society or the commencement of this section, whichever is later; and
(c) in the case of a friendly society which is of a description prescribed in regulations under subsection (1)(b) above, an investigation into its condition at a date not later than 12 months after it became such a society or the coming into operation of the regulations, whichever is later.
(3) When such an investigation has been made, the society shall—
(a) cause an abstract of the actuary’s report of the investigation to be made; and
(b) send three copies of that abstract to the Commission within the period of 6 months beginning with the date to which the accounts of the society were made up for the purposes of the investigation or such further period (not exceeding 3 months) as the Commission may by notice to the society direct;
and one of those copies shall be signed by such persons as may be prescribed by regulations.
(4) The Commission shall consider the abstract, and if it appears to the Commission to be inaccurate or incomplete in any respect, it shall communicate with the society with a view to the correction of any such inaccuracies and the supply of deficiencies.
(5) An investigation under this section shall include—
(a) a valuation of the liabilities of the society attributable to its long term business; and
(b) a determination of any excess over those liabilities of the assets representing the fund or funds maintained by the society in respect of that business and, where any rights of any long term policy holders to participate in profits relate to particular parts of such a fund, a determination of any excess of assets over liabilities in respect of each of those parts.
(6) At least once in every period of 5 years a friendly society to which this section applies shall prepare a statement of its long term business at the date to which the accounts of the society are made up for the purposes of an investigation under this section.
(7) The form and contents of any abstract or statement under this section shall be such as the Commission may direct; and a direction under this subsection may be given to societies of a specified description or to a specified society.
(8) Regulations under this section shall be made by the Commission with the consent of the Treasury.
(1) Subject to the following provisions of this section, a friendly society which—
(a) is not a society to which section 46 above applies and carries on insurance business; or
(b) is a society to which that section applies and carries on general business;
shall, at least once in every period of 3 years, cause an investigation to be made by the appropriate actuary into the financial condition of the society in respect of its insurance business.
(2) Where an investigation under this section is carried out, the society shall cause an abstract of the actuary’s report to be made and sent to the Commission within 6 months of the date to which the accounts of the society were made up for the purposes of that investigation or such further period (not exceeding 6 months) as the Commission may by notice to the society direct.
(3) The first investigation into a society’s financial condition under this section shall be—
(a) in the case of a registered friendly society, or an incorporated friendly society which was formerly a registered friendly society, an investigation into its condition at a date not later than 3 years after—
(i) the commencement of this section; or
(ii) the date as at which its assets and liabilities were last valued under section 41 of the 1974 Act,
whichever is earlier; or
(b) in the case of any other incorporated friendly society, an investigation into its condition at a date not later than 3 years after the date on which it is registered.
(4) Subject to subsection (5) below, a friendly society shall send to the Commission, not later than 6 months after each anniversary of the date to which the accounts of the society were made up for the purposes of the last investigation into its financial condition under this section—
(a) a certificate given by the appropriate actuary that there has been no material change in its financial condition in respect of its insurance business since it sent the last abstract under subsection (2) above; or
(b) a statement by the appropriate actuary that he is unable to give such a certificate.
(5) A society is not under the duty imposed by subsection (4) above if, before a date by which a certificate or statement must be sent, a further investigation under this section has been carried out and the requisite abstract has been sent to the Commission.
(6) If a society sends the Commission a statement under subsection (4)(b) above, it shall be the society’s duty to cause an investigation to be carried out under this section; and in such a case—
(a) the date to which the society’s accounts are made up for the purposes of the investigation shall be the latest anniversary of the date to which its accounts were made up for the purposes of the last investigation under this section; and
(b) the abstract required by subsection (2) above shall be sent to the Commission within 6 months of the date by which that statement was required to be sent under subsection (4) above.
(7) An investigation under this section into the financial condition of a society which falls within subsection (1)(a) above shall include—
(a) a valuation of the liabilities of the society attributable to its insurance business; and
(c) a determination of any excess over the liabilities so attributable of the assets representing the fund or funds maintained by the society in respect of its insurance business and, where any rights of any long term policy holders to participate in profits relate to particular parts of such a fund, a determination of any excess of assets over liabilities in respect of each of those parts.
(8) An investigation under this section into the financial condition of a society falling within subsection (1)(b) above shall include—
(a) a valuation of the liabilities of the society attributable to its general business; and
(b) a determination of any excess over the liabilities so attributable of the assets representing the fund or funds maintained by the society in respect of that business.
(9) The form and contents of any abstract under this section shall be such as the Commission may direct; and such a direction may be given to societies of a specified description or to a specified society.
(10) The Commission may dispense with the requirements of subsections (1) to (6) above in respect of societies to whose purposes, or the nature or scale of whose insurance business, it may deem those provisions inapplicable.
(11) The Commission may dispense with the requirements of subsections (1) to (6) above in respect of any particular insurance business of a society if, in the Commission’s opinion, those provisions are inapplicable to that business because of its nature or scale or the manner in which it is carried on.
(12) In relation to any society on which a partial exemption is conferred under subsection (11) above, subsections (1) to (8) above shall have effect as if—
(a) references to the financial condition of the society excluded its condition in relation to the business to which the partial exemption relates; and
(b) subsections (7) and (8) referred only to the assets and liabilities other than those attributable to that business.
(13) The Commission may direct that this section shall have effect, in relation to societies of a specified description or to a specified society, as if for any reference to 3 years there were substituted a reference to 5 years.
(14) A direction under subsection (12) or (13) above may make such transitional provision as the Commission considers appropriate.
(1) This section applies to a friendly society which—
(a) carries on long term business in the United Kingdom and falls within subsection (2) of section 37 above;
(b) carries on general business in the United Kingdom and falls within subsection (3) of that section; or
(c) not being a society to which either of those subsections applies, carries on insurance business in the United Kingdom and is of any such description as may be prescribed by regulations.
(2) A society to which this section applies shall maintain a margin of solvency in respect of its insurance business of such amount as may be prescribed by or determined in accordance with regulations made for the purposes of this section.
(3) If such a society fails to comply with a requirement to maintain a margin of solvency, the society—
(a) shall at the request of the Commission submit to it a plan for the restoration of a sound financial position;
(b) shall propose modifications to the plan (or the plan as previously modified) if the Commission considers it inadequate;
(c) shall give effect to any plan accepted by the Commission as adequate.
(4) Where a friendly society carries on both long term and general business, subsection (2) above shall have effect as if the requirement to maintain a margin of solvency were a requirement to maintain separate margins in respect of each of those two kinds of business.
(5) For the purposes of this Act a margin of solvency, in relation to a friendly society, is the excess of the value of the society’s assets over the amount of its liabilities.
(6) Regulations under this section may—
(a) make different provision with respect to societies of different descriptions;
(b) prescribe different margins of solvency with respect to different descriptions of business carried on by societies;
(c) prescribe the descriptions of assets or liabilities that are to be taken into account in determining whether a margin of solvency is being maintained; and
(d) prescribe different criteria for determining whether a margin of solvency is being maintained by reference to the different descriptions of long term or general business which may be carried on by societies.
(7) Regulations under this section shall be made by the Commission with the consent of the Treasury.
(1) If the margin of solvency maintained by a friendly society in respect of its insurance business falls below such amount as may be prescribed by or determined in accordance with regulations made for the purposes of this section by the Commission with the consent of the Treasury, the society shall at the request of the Commission submit to it a short-term financial scheme.
(2) A friendly society that has submitted a scheme to the Commission under subsection (1) above shall propose modifications to the scheme (or the scheme as previously modified) if the Commission considers it inadequate, and shall give effect to any scheme accepted by it as adequate.
(3) Where a friendly society carries on both long term and general business, subsection (1) above shall have effect as if the reference to the margin of solvency maintained by the society were a reference to the margin of solvency maintained in respect of each of those two kinds of business.
(1) If it appears to the Commission—
(a) that there has been or is, on the part of a friendly society or its committee of management, a failure to satisfy any one or more of the following criteria of prudent management; or
(b) that the society’s officers do not have the capacity and intention to conduct its affairs so as to satisfy those criteria,
it shall be entitled to assume for the purposes of its relevant prudential powers that it is expedient to exercise the powers in order to protect the interests of members of the society.
(2) The prudential powers relevant for the purposes of this section are its powers—
(a) under section 34 above to impose conditions on a society’s authorisation;
(b) under section 40 above to give a direction by virtue of subsection (3)(c);
(c) under section 51 below to make an order forbidding the acceptance of new members;
(d) under section 53 below, to give a direction;
(e) under section 90 below, to order a transfer of the society’s engagements.
(3) For the purposes of this Act, the criteria of prudent management are—
1 Maintenance of any margin of solvency required by section 48 above.
2 Maintenance of liquid assets sufficient to meet the liabilities of the society as they become due.
3 Maintenance of the requisite accounting records and systems of control of business and of inspection and report.
4 Direction and management—
(a) by a sufficient number of persons who are fit and proper to be members of the committee of management or, as the case may be, other officers, in their respective positions,
(b) conducted by them, with prudence and integrity, in the interests of the members of the society.
5 In relation to insurance business, direction and management which, in addition to satisfying the other requirements as to direction and management, is such as to fulfil the reasonable expectations of members of the society as to the conduct of such business.
6 Conduct of the society’s activities with adequate professional skills.
7 Supervision of the activities—
(a) of any subsidiary of the society or of any body of which the society has joint control; and
(b) of any registered branch of the society;
with due care and diligence in the interests of the members of the society and without detriment to the conduct of the society’s activities.
(4) Nothing in this section implies that it is improper for a determination for any purpose of the Commission’s relevant prudential powers to take account of factors other than the criteria in subsection (3) above.
(5) In considering whether a society has satisfied the 7th criterion in subsection (3) above, the Commission shall have regard to the extent to which the operation of the subsidiary, jointly controlled body or registered branch is undertaken in accordance with the other 6 criteria in that subsection so far as they are relevant.
(6) A failure to satisfy any of the first 3 criteria in subsection (3) above shall be treated, for the purposes of this section, as a failure on the part of a society’s committee of management prudently to conduct the affairs of the society.
(7) A failure on the part of an authorised friendly society to comply with any conditions to which its authorisation under section 32 above is subject shall be treated, for the purposes of this section, as a failure on the part of the society’s committee of management prudently to conduct the affairs of the society.
(8) Any carrying on by a friendly society of an activity beyond its powers shall be treated, for the purposes of this section, as a failure on the part of the society’s committee of management prudently to conduct the affairs of the society.
(9) Any carrying on of activities which are beyond its powers—
(a) by a subsidiary of, or a body jointly controlled by, an incorporated friendly society; or
(b) by a registered branch of a registered friendly society,
shall be treated for the purposes of this section as a failure on the part of the society’s committee of management to supervise the activities of the subsidiary, jointly controlled body or registered branch with due care and diligence.
(10) The following provisions apply for the interpretation of the list of criteria in subsection (3) above in their application to a friendly society, that is to say—
“activities” includes activities the society proposes to carry on;
“requisite”, with reference to accounting records and systems of control, means such as are required by section 68 below; and
“sufficient” with reference to the number of members of a committee of management or of other officers, means sufficient having regard to the range and scale of the society’s business.
(1) Subject to the provisions of this section, if the Commission considers it expedient to do so in the interests of the members or potential members of a friendly society, it may give the society a direction forbidding it to accept any new members.
(2) If the Commission proposes to give such a direction, it shall serve on the society a notice stating that it proposes to give a direction.
(3) A notice under subsection (2) above shall specify the grounds for the proposed direction.
(4) The Commission shall consider any representations made by the society within such period (not being less than one month) from the date on which the society is served with the notice as the Commission may allow and, if the society so requests, shall afford to it an opportunity of being heard by the Commission within that period.
(5) The Commission may not give a direction unless all the grounds for giving it are those, or among those, which were specified in the notice served on the society under subsection (2) above.
(6) On giving a direction, the Commission shall—
(a) serve notice of it on the society, specifying the grounds for making it;
(b) publish notice of it in one or more of the London, Edinburgh and Belfast Gazettes and in any such other ways as it considers appropriate; and
(c) send a copy of it to the central office.
(7) A society which contravenes a direction given to it under this section shall be guilty of an offence and shall be liable—
(a) on conviction on indictment, to a fine; and
(b) on summary conviction, to a fine not exceeding the statutory maximum.
(8) The central office shall keep a copy of a direction given to a friendly society under this section in the public file of the society.
(1) Where the Commission has reason to believe that any of the conditions mentioned in subsection (2) below is satisfied, it may present a petition to the High Court for the winding up of the society under the applicable winding up legislation.
(2) The conditions referred to in subsection (1) above are—
(a) that a friendly society is carrying on activities that are not activities which such a society is permitted by this Act or the 1974 Act to carry on;
(b) that the society is not carrying on any activity falling within Schedule 2 to this Act;
(c) that the society is failing to satisfy an obligation to which it is subject by virtue of any provision of the law of another member state giving effect to the general insurance or the life Directives;
(d) that a subsidiary of an incorporated friendly society or a body jointly controlled by such a society is carrying on activities other than those mentioned in Schedule 7 to this Act;
and a court shall not make an order for the winding up of a society by virtue of this section unless it is satisfied that one or more of those conditions is satisfied.
(3) Where the Commission has reason to believe that any of the conditions mentioned in subsection (4) below is satisfied, it may make an application to the High Court for an order under subsection (5) below.
(4) The conditions referred to in subsection (3) above are—
(a) any of the conditions mentioned in subsection (2) above; or
(b) that an incorporated friendly society has taken part in forming or has acquired control of a body corporate jointly with any person other than another incorporated friendly society without the consent of the Commission;
and a court shall not make an order under subsection (5) below unless it is satisfied that one or both of the conditions mentioned in this subsection is satisfied.
(5) An order under this subsection is an order directing the society to modify its business as directed in the order or to take such other steps as may be so directed or, where the condition mentioned in subsection (4)(b) above is satisfied, an order directing the society to cease jointly controlling the body corporate.
(6) Where a court makes an order under subsection (5) above, the Commission shall send a copy of it to the central office and the central office shall keep the copy in the public file of the society.
(7) The power to present a petition or to make an application for an order under subsection (5) above is available to the Commission whether or not it has previously presented a petition or made an application for such an order, as the case may be.
(8) In the application of this section to a friendly society whose registered office is in Scotland or Northern Ireland, references to the High Court shall be read as references to the Court of Session or, as the case may be, the High Court in Northern Ireland.
(9) In this section “the applicable winding up legislation”, in relation to an incorporated friendly society, has the same meaning as in section 23 above and, in relation to a registered friendly society, means Part V of the [1986 c. 45.] Insolvency Act 1986 or (where the society’s registered office is in Northern Ireland) Part VI of the [S.I. 1989/2405 (N.I. 19).] Insolvency (Northern Ireland) Order 1989.
(1) If the Commission considers it expedient to do so in order to protect the interests of members of a friendly society which does not require authorisation under section 32 above, it may direct the society to take such action as appears to the Commission to be appropriate, having regard to any risk—
(a) that the society may be unable to meet its liabilities; or
(b) that it will not be managed in the interests of its members.
(2) The power conferred by this section shall not be exercised in such a way as to restrict the society’s freedom to dispose of its assets except where the ground for intervention arises out of the submission by the society to the Commission of an account or statement specifying, as the amount of any liabilities of the society, an amount appearing to the Commission to have been determined otherwise than in accordance with—
(a) valuation regulations; or
(b) where no such regulations are applicable, generally accepted accounting concepts, bases and policies or other generally accepted methods appropriate for friendly societies.
(1) In this section “friendly society group” means an incorporated friendly society, subsidiaries of that society and bodies jointly controlled by it.
(2) If it appears to the Commission that the activities of subsidiaries of an incorporated friendly society or bodies jointly controlled by it are or may become disproportionate to those of the friendly society group as a whole, it may direct the society—
(a) to take or refrain from taking steps specified in the direction with a view to securing that the activities in question cease to be or do not become disproportionate; or
(b) to take steps so specified with a view to securing—
(i) that it ceases to have control or joint control of any subsidiary or jointly controlled body in question; or
(ii) that any such subsidiary or jointly controlled body is wound up.
(3) If it appears to the Commission that any activity of a subsidiary of an incorporated friendly society or of a body jointly controlled by such a society is unsuitable for a member of a friendly society group, it may direct the society—
(a) to take steps specified in the direction with a view to securing that that activity ceases; or
(b) to take steps so specified with a view to securing—
(i) that it ceases to have control or joint control of the subsidiary or jointly controlled body; or
(ii) that the subsidiary or jointly controlled body is wound up.
(4) A direction under this section may specify when the society is to comply with it and may do so by reference to a date, the end of a period or the happening of an event.
(5) A society given a direction under this section must—
(a) comply with the direction; or
(b) convert itself into a company in accordance with Part VIII of this Act.
(6) The Commission may by notice to the society vary or revoke a direction under this section.
(7) If a society requests the Commission to notify it as to whether in the opinion of the Commission it has complied with a direction under this section, the Commission shall comply with the request.
(8) The Commission may issue to incorporated friendly societies (or to any description of such societies) such general guidance as it thinks appropriate as to circumstances in which a direction under this section is or is not likely to be given.
(9) The Commission shall send to the central office a copy—
(a) of a direction under this section;
(b) of a notice under subsection (6) above; or
(c) of a notification under subsection (7) above;
and the central office shall keep a copy in the public file of the society.
(1) This section applies where a friendly society carries on any group insurance business providing benefits for or in respect of a group of persons who are not members of the society.
(2) If it appears to the Commission that the business so carried on is or may become disproportionate to the other activities of the society (including any group insurance business carried on for the provision of benefits for or in respect of persons who are members of the society), it may direct the society to take or refrain from taking steps specified in the direction with a view to securing that the group business in question ceases to be or does not become disproportionate.
(3) Subsections (4) to (9) of section 54 above shall apply in relation to a direction under this section as they apply to a direction under that section.
(1) Regulations may be made by the Commission, with the consent of the Treasury, as respects the matters specified in subsection (2) below, in relation to contracts made by friendly societies the effecting of which constitutes the carrying on of insurance business falling within class III in head A in Schedule 2 to this Act.
(2) Regulations under this section may make provision for—
(a) restricting the descriptions of property or the indices of the value of property by reference to which benefits under the contracts may be determined;
(b) restricting the proportion of those benefits which may be determined by reference to property of a specified description or a specified index;
(c) regulating the manner in which and the frequency with which property of any description is to be valued for the purpose of determining those benefits and the times at which reference is to be made for that purpose to any index of the value of property;
(d) requiring friendly societies that enter into such contracts to appoint valuers for carrying out valuations of property of any description for the purpose of determining benefits under the contracts (being valuers who comply with the prescribed requirement as to qualifications and independence from the society) and to furnish the Commission with the prescribed information in relation to such appointments;
(e) requiring societies that enter into such contracts to furnish in such manner and at such times or intervals as may be prescribed such information relating to the value of the benefits under the contracts as may be prescribed, whether by sending notices to their members, depositing statements with the Commission, publication in the press or otherwise;
(f) requiring societies that enter into such contracts to furnish to the Commission in such manner and at such times or intervals as may be prescribed, such information certified in such manner as may be prescribed with respect to so much of their business as is concerned with the contracts or with any class or description of the contracts, and enabling the Commission to publish such information in such ways as it thinks appropriate.
(3) Regulations made for the purposes of subsection (2)(e) above may, in relation to notices required to be sent to members of friendly societies, impose requirements (whether as to type, size, colour or disposition of lettering, quality or colour of paper, or otherwise) for securing that such notices are easily legible.
(4) The Commission may, on the application of any friendly society, alter the requirements of regulations under this section so as to adapt those requirements to the circumstances of that society or to any particular kind of contract entered into or proposed to be entered into by that society.
(5) Regulations under this section may, to such extent as may be specified in them, apply in relation to contracts entered into before the coming into operation of the regulations, including contracts entered into before the passing of this Act.
(6) In this section “prescribed” means prescribed by regulations under this section.
Friendly Societies Act 1992