Friendly societies are to enjoy more freedom to launch innovative products and work in niche markets...
Friendly societies are to enjoy more freedom to launch innovative products and work in niche markets, following the Treasury's intention to remove restrictions on subsidiaries and pass supervision of societies to the Financial Services Authority (FSA) in December this year.
This is good news for clients seeking income protection policies, a product pioneered by the friendly society movement.
The plans, outlined in the Annual Report of the Friendly Societies Commission, mean that friendly societies will only have to answer to the FSA, instead of the current multi-tiered regulation system which includes the Treasury.
This should, in turn, help to speed up product launches, enabling friendly societies to compete more effectively with other providers in the protection market.
The report said: 'Of special interest to the friendly society movement is the Treasury's intention to introduce, at the same time as the implementation of the Financial Services and Markets Act 2000, the measures provided for in the Act to remove restrictions on the kind of subsidiaries which incorporated societies may have. The Commission is aware that a number of societies are looking forward to the new freedom these changes will provide.'
Marion Poole, general secretary of the Association of Friendly Societies, said: 'Due to the changes taking place, friendly societies will at last have some degree of freedom when deciding what to do. We have waited a long time to persuade the Treasury that we should not have to wait for this ruling.
'Now that we only have the regulator to deal with, it will speed up business and put friendly societies on a more equal level with other providers. Instead of taking two years to approve a new product, we will now be able to launch products more quickly.'
Poole added: 'This means that friendly societies will be able to act upon niche markets before they disappear and provide much more innovative products.'
