Smaller Friendly Societies and MutualsGroup

Terms of Reference (May 2010)

The Group is directly responsible to the Board of AFM and will report to its meetings.

Main functions of the Group are to:

  • give the opportunity for smaller friendly societies and mutual insurers to share ideas and experiences;
  • provide the means by which to discuss issues that primarily affect smaller mutuals for referral to the AFM Board;
  • put forward recommendations to the AFM Board in relation to policy and strategy development where they affect smaller friendly societies and mutuals;
  • ensure that the interests of smaller friendly societies are considered and protected;
  • develop a process to provide information that will aid AFM to promote the benefits of the sector to the media, FSA and Regulator through the Board of AFM;
  • identify and deliver training and development that helps to contribute towards best practice.

Membership of the Group

Membership is open to all mutual insurers and friendly societies who meet the definition of small mutual insurers in the Annotated Combined Code. The Group may co-opt up to two representatives of societies who do not meet the definition.

Paul Hudson of Cirencester friendly has been elected to serve as Chair of the Group until further notice.

Principles agreed at the final AFS Board for the uses and management of the ring-fenced friendly society funds

Uses of the ring-fenced funds

  • The funds will be used for the furtherance of friendly societies
  • This might include, but is not restricted to:
  • subsidising fees for up to three years, for any friendly society if their fee to AFM is any greater than it would have been under AFS;
  • funding an extra part of conference just for friendly societies;
  • providing training and technical support for friendly societies, that require resource beyond that available within AFM or which are beyond the strategic scope of AFM;
  • friendly society lunches/ CEO forums;
  • issues emerging out of the smaller societies and mutuals committee.
  • Unused funds will be invested in low risk products.
  • After ten years, a decision will be taken on any remaining funds and if unallocated will be passed across to AFM.

Procedural aspects

  • Friendly society representatives in AFS at the time of merger and sitting on the AFM Board would take responsibility for decisions on spend.
  • Signatories to the accounts will be the Chief Executive of AFM plus an individual agreed by friendly society members (currently Elaine Fairless).
  • The annual financial statement for AFM will report on the status of the ring-fenced fund and will be subject to the usual audit process within AFM.
  • Friendly societies who cease to be members of AFM have no further say in how the funds are spent and will not benefit from the expenditure.