Friendly Societies

Current project status

• Initiation: Could include discussing scope and terms of reference with lead Government Department
• Pre-consultation: Could include approaching interest groups and specialists, producing scoping and issues papers, finalising terms of project
• Consultation: Likely to include consultation events and paper, making provisional proposals for comment
• Policy development: Will include analysis of consultation responses. Could include further issues papers and consultation on draft Bill
• Reported: Usually recommendations for law reform but can be advice to government, scoping report or other recommendations

The Law Commission has been asked by HM Treasury to review the legal framework governing friendly societies.  

About friendly societies  

A friendly society is an organisation which provides insurance or other benefits to its members, funded by its members. In providing schemes of mutual support, friendly societies can serve an important commercial purpose, especially in terms of fostering economic corporate diversity. 

Friendly societies, like co-operatives, subscribe to a mutual ownership model. This means they are owned and run by their members, and profits are reinvested amongst or for the benefit of the membership. Unlike in companies, there are no shareholders or outside investors. 

Although there are significantly fewer friendly societies in England and Wales than there are co-operatives, friendly societies can play a significant role in the lives of their members and in the wider economy. They can foster social cohesion among a membership with something in common and can provide some level of financial support to its members, either in the form of a non-contractual discretionary benefit or a contractual benefit (pursuant to an insurance contract, for instance). Friendly societies providing contractual benefits must have permission to do so under the Financial Services and Markets Act 2000. These kinds of friendly societies are therefore regulated and authorised by the Prudential Regulation Authority, in addition to the Financial Conduct Authority, which acts as the conduct regulator and registrar for all friendly societies.  

About this project  

This project will review the Friendly Societies Act 1974 (“1974 Act”) and the Friendly Societies Act 1992 (“1992 Act”). The 1974 remains in force until such time as there are no longer any societies registered under it. Friendly societies registered under the 1974 Act are governed by that Act and the 1992 Act. By contrast, friendly societies registered and incorporated under the 1992 Act are governed solely by the 1992 Act. Any new friendly societies will fall within the scope of the 1992 Act alone.  

We have been asked to review these Acts, to ensure that they are fitting to the nature and needs of friendly societies, and to ensure that the regulation is proportionate and effective.  

We started work on this project in March 2024. We are currently working on a consultation paper, which we plan to publish in February 2025. The paper will discuss the current law and will make provisional proposals for reform. We will ask stakeholders for their views on our proposals. Once the paper is published, the consultation period will be open for 12 weeks. Stakeholders will be able to provide their responses through an online questionnaire.  

Contact  

Anyone wishing to be added to our email list can contact us on the following address: friendlies@lawcommission.gov.uk   

Related projects  

You might also be interested in our review of the law relating to Co-operatives and Community Benefit Societies.