Friendlies under fire on secrecy

 

Depositors with Britain's friendly society movement and their advisers are being kept in the dark by the Friendly Societies Commission as to the identity of those societies which file their accounts late, a sign that the management of the society - and therefore of depositors' funds - may be lax.

The Friendly Societies Commission is a State regulatory body chaired by Martin Roberts, director of the Insurance and Friendly Societies Division of the Financial Services Authority.

Friendly societies are mutual organisations whose members contribute regularly in return for tax-exempt benefits such as life assurance, burial plans, or savings plans for children.

A few of the 278 friendly societies are big financial institutions, but most are 'kitchen-table' operations, some of great age. Funds managed by the 75 bigger societies belonging to the Association of Friendly Societies rose 21% to £15.4bn in 1999. Many smaller societies no longer take in funds, but 108 are still authorised to write new business. More than six million people save or invest with friendly societies.

The Government is considering making it easier for the societies to bring new products to market as a way of reducing voters' dependence on State benefits.

Year after year, however, the Commission repeatedly warns friendly societies about late submission of accounts, and finally wrote to all of them threatening prosecution for failure to file 1998 accounts on time.

This, says the Commission in its own 1999-2000 accounts, brought about a general improvement, but a small minority took no notice. Two societies, not named in the Commission's annual report, were 'successfully prosecuted'.

The Commission identified them as Bethel FS, fined £1,000, and Legg Partnership FS, fined £3,000. Legg and Bethel do not take in new funds.

Marion Poole, general secretary of the Association of Friendly Societies, said: 'Societies which do not file on time are not those offering products in the marketplace. Information about their identity is in the public domain following court proceedings, so there is no reason why the FSC should not publish it, if only to ensure that the public does not suspect major friendly societies of failing to comply with regulatory requirements.'