Policyholders Protection Act 1997

Section 20.

SCHEDULE 4 Friendly societies: consequential amendments

Part I Amendments of Schedule 17 to the Friendly Societies Act 1992

1 In paragraph 1(1), in the inserted section 1(2)(aa), for sub-paragraph (i) there shall be substituted—

“(i) members of friendly societies who have entered into contracts of insurance with societies of which they are members;”.

2 For paragraph 3 there shall be substituted—

“3 (1) Section 4 (protection confined to insurance under qualifying policies of protected risks or commitments) shall be amended as follows.

(2) In subsection (2), at the end there shall be inserted “, and

(c) a contract of insurance with a friendly society entered into through an establishment in—

(i) the United Kingdom,

(ii) another EEA State, or

(iii) the Channel Islands or the Isle of Man.”

(3) In subsection (3)—

(a) in paragraph (a), after “above” there shall be inserted “, or a contract falling within subsection (2)(c)(i) above”,

(b) in paragraph (b), after “above” there shall be inserted “, or a contract falling within subsection (2)(c)(ii) above”, and

(c) in paragraph (c), after “above” there shall be inserted “or a contract falling within subsection (2)(c)(iii) above”.”

3 (1) Paragraph 6 shall be amended as follows.

(2) In sub-paragraph (1), in the words inserted in subsection (1) of section 8 of the 1975 Act, for “authorised insurance company” there shall be substituted “insurance company to which this Act applies”.

(3) In sub-paragraph (2), in the words inserted in subsection (4) of that section, for “authorised insurance companies” there shall be substituted “insurance companies which are not friendly societies”.

4 (1) In paragraph 7, the inserted section 8A shall be amended as follows.

(2) The existing provision shall become subsection (1) and, in that subsection—

(a) after “14” there shall be inserted “and subsection (2)”, and

(b) for “was a United Kingdom policy at the beginning of the liquidation” there shall be substituted “is a qualifying policy”.

(3) After that subsection there shall be inserted—

“(2) The duty of the Board under subsection (1) above shall only apply if the liability is in respect of a protected risk”.

5 In paragraph 9—

(a) for “subsection (3)” there shall be substituted “subsection (3A)”,

(b) the subsection inserted in section 11 of the 1975 Act shall be renumbered “(3B)” and, in that subsection, for paragraph (b) there shall be substituted—

“(b) in subsection (5)(b) below, with the insertion after the words “this Act applies” of the words “or authorised friendly society”,”, and

(c) at the end there shall be inserted “and in subsection (5)(a) for “another” there shall be substituted “an””.

6 In paragraph 11, in the subsection inserted in section 16 of the 1975 Act, after paragraph (a) there shall be inserted—

“(aa) with, in subsection (3), the substitution for “another” of “an”;”.

7 For paragraph 16 there shall be substituted—

“16 In section 25 (application of surplus funds by the Board), in subsection (1), after the word “applies”, there shall be inserted “and to qualifying friendly societies carrying on business in the United Kingdom”.”

8 (1) Paragraph 18 shall be amended as follows.

(2) For sub-paragraph (3) there shall be substituted—

“(3) In subsection (2), for “subsection (2ZA)” there shall be substituted “subsections (2ZA) to (2ZC)”.”

(3) In sub-paragraph (4)—

(a) for “subsection (2)” there shall be substituted “subsection (2ZA)”, and

(b) the subsections inserted in section 32 of the 1975 Act shall be renumbered “(2ZB)” and “(2ZC)” respectively.

(4) After that sub-paragraph there shall be inserted—

“(4A) In subsection (2A), in paragraph (c)—

(a) after “policies” there shall be inserted “, or contracts,”, and

(b) at the end there shall be inserted “, or entered into the contract”.

(4B) In subsection (2B), after “policy”, in both places, there shall be inserted “or contract”.”

Part II Application of the 1975 Act to existing contracts

9 For section 4 there shall be substituted—

“4 Protection confined to United Kingdom policies.

(1) A policyholder is eligible for the assistance or protection of the Board in accordance with any provision of sections 8A to 16 below only in respect of a policy of insurance which was a United Kingdom policy for the purposes of this Act at the material time for the purposes of the provision in question.

(2) A contract of insurance with a friendly society is a United Kingdom policy for the purposes of this Act at any time when the performance by the society of any of its obligations under the contract would constitute the carrying on by the society in the United Kingdom of insurance business of any class.”

10 In section 8A—

(a) in subsection (1)—

(i) the words “and subsection (2)” shall be omitted, and

(ii) for “is a qualifying policy” there shall be substituted “was a United Kingdom policy at the beginning of the liquidation”, and

(b) subsection (2) shall be omitted.

11 In section 10—

(a) in subsection (2)—

(i) the words “and subsection (2A)” shall be omitted, and

(ii) for “is a qualifying policy” there shall be substituted “was a United Kingdom policy at the beginning of the liquidation”, and

(b) subsection (2A) shall be omitted.

12 In section 11—

(a) in subsection (3)—

(i) the words “and subsection (3A)” shall be omitted, and

(ii) for “is a qualifying policy” there shall be substituted “was a United Kingdom policy at the beginning of the liquidation”, and

(b) subsection (3A) shall be omitted.

13 In section 12—

(a) in subsection (1)—

(i) the words “Subject to subsection (1A) below,” shall be omitted, and

(ii) for “is a qualifying policy” there shall be substituted “was a United Kingdom policy at the beginning of the liquidation”, and

(b) subsection (1A) shall be omitted.

14 In section 15—

(a) in subsection (2), for the words from “if” to the end there shall be substituted—

“(a) if he is a policyholder in respect of a general policy or a long term policy of a company in liquidation which was a United Kingdom policy at the beginning of the liquidation; or

(b) if he is a policyholder in respect of a general policy or a long term policy of a company in provisional liquidation which was a United Kingdom policy at the time when the provisional liquidator was appointed.”, and

(b) in subsection (3), the words “, in relation to the insurance of a protected risk or commitment” shall be omitted.

15 In section 16—

(a) in subsection (6), after “In this subsection” there shall be inserted “and in the following provisions of this section”, and

(b) in subsection (9), for “is a qualifying policy and insures a protected risk or commitment” there shall be substituted “was a United Kingdom policy at the relevant time”.

16 In section 17—

(a) in subsection (4)—

(i) the words “Subject to subsection (4A) below,” shall be omitted, and

(ii) for “is a qualifying policy” there shall be substituted “was a United Kingdom policy at the relevant time as defined by section 16(6) above”, and

(b) subsection (4A) shall be omitted.

17 In section 21, subsection (9A) shall be omitted.

18 In section 32(1), at the end there shall be inserted “and references to United Kingdom policies shall be construed in accordance with section 4 above”.