The Prudential Regulation Authority (PRA) has launched a consultation on making amalgamations and transfers of friendly societies easier to complete.
The regulator wants to improve the clarity and accessibility of Part VIII of the FSocs [amalgamations and transfers of friendly societies] act.
This would mean helping firms to better understand the process, timing and cost of an amalgamation or transfer.
“The amalgamations and transfers of friendly societies (FSocs) form an important part of healthy market dynamics within the insurance sector,” the consultation paper said.
The consultation comes at a time when OneFamily and Scottish Friendly agreed to merge earlier this year, creating an entity with almost £10bn worth of assets under management for more than 2.3m members across the UK.
Clearer and structured
The PRA intends that the benefits of this consultation could include more detailed guidance, more effective engagement and reducing avoidable delays.
It also seeks to set clearer and more structured steps for firms to follow when undertaking a Part VIII transfer, while allowing participants to take an alternative approach where appropriate.
This consultation may have been launched to meet the government’s ambition of doubling the size of the mutual and co-operative sector, said Cara Spinks, head of life and health at Broadstone.
“Delivering that ambition will require a regulatory framework that supports mutuals not only to grow organically but also to consolidate and build stronger organisations with the scale to compete effectively.”
Spinks added that the PRA’s proposals are a practical step towards removing barriers to consolidation and growth across the friendly society and wider mutual sector.
“Amalgamations and transfers can enable mutuals to build scale, strengthen their financial resilience and secure better long-term outcomes for members, but uncertainty around the process can otherwise make transactions difficult to pursue, particularly for smaller firms.
“By providing greater clarity on the typical sequence of a Part VIII transaction and how the PRA will exercise its discretion, the proposals should help firms identify issues earlier to reduce avoidable delays and costs.
“This could make it easier to progress transactions that are demonstrably in members’ interests, while preserving the safeguards needed to protect policyholders.
“A clearer and more proportionate Part VIII process can help retain members and assets within the mutual sector and support the creation of larger, more resilient organisations.”