Friendly societies

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We published our final report and draft legislation, which includes our law reform recommendations to Government, on 10 September 2026.

Background (Back to top)

Friendly societies are owned and run by their members, and profits are distributed to the membership or reinvested for the benefit of the membership. They subscribe to a mutual ownership model and do not have shareholders or outside investors.

Friendly societies have a long and illustrious history in the UK, having enjoyed statutory recognition since the 1700s. People have used them to manage the financial risks associated with illness, unemployment, old age and death. Over the years they have provided financial and other benefits to millions of people across the UK. The sector is now much smaller than it once was, but friendly societies still hold significant assets and serve many members across the United Kingdom.

In providing schemes of mutual support, friendly societies can serve an important commercial purpose and foster economic corporate diversity as well as financial inclusion.

Project (Back to top)

We were asked to review the Friendly Societies Act 1974 (“1974 Act”) and the Friendly Societies Act 1992 (“1992 Act”), and make recommendations for reform to ensure that:

they fit the nature and needs of societies;
the regulation is proportionate and predictably certain; and
the legislative framework facilitates and encourages sustainable growth.

Our recommendations for reform

The repeal of the 1974 Act. We recommend repealing the 1974 Act to simplify the law that applies to mutual societies. This would bring friendly societies legislation together under a single Act, the 1992 Act, and enable other societies registered under the 1974 Act to convert to more modern and appropriate organisational structures, such as societies registered under the Co-operative and Community Benefit Societies Act 2014. Repeal will take effect three years after the implementation of the draft Bill, if passed by Parliament.

Updated duties and obligations for members of committees of management. To reflect widespread usage in the sector, we are recommending that committees of management and committee members are renamed boards and directors respectively. We recommend that directors’ duties and dealings with the society are aligned with the Companies Act 2006, making the obligations of friendly societies’ directors easier to identify and understand.

Simplification and streamlining of transfers, amalgamations, and conversions. We recommend changes which would make the existing transfer process quicker, more proportionate and cost-effective, while maintaining core safeguards to protect members. A fast-track transfer process would also be made available to “smaller” regulated friendly societies and non-regulated friendly societies.

Reduction of the burden of the existing audit regime. We recommend that societies choose their own financial year-end date rather than being tied to a single date shared across the sector. This would spread reporting activity throughout the year and reduce the burden on societies and auditors alike. Additionally, smaller, non-regulated friendly societies would benefit from a lighter-touch audit regime, reducing costs for societies that provide discretionary benefits such as help with funeral costs or hardship payments.

Expansion of friendly societies’ business activities. We recommend that friendly societies be able to undertake all types of insurance business (if the appropriate permissions are obtained from the Prudential Regulation Authority). We also recommend loosening the restrictions on the investment and reinsurance activities that friendly societies can engage in to assist friendly societies with growth and competition faced from commercial insurers.

The report and draft Bill have been laid before Parliament. It will be for Government to consider and decide whether to implement our recommendations for reform.