Friendly societies will be able to compete in the stakeholder and group health insurance markets now...
Friendly societies will be able to compete in the stakeholder and group health insurance markets now that the Government has promised to ease restrictions on their product development.
The alterations to the Financial Services and Markets Bill are expected to be carried through and be law by the second half of this year. At the moment the societies are subject to a list of proscribed activities which means they need to get legislation passed every time they want to provide new services. The changes ensure that list of activities is dropped and instead the societies will have to get permission from the FSA to move into new business areas. The result is that in addition to stakeholder and group health, it will be easier for friendly societies to compete in the likes of e-commerce services, corporate financing and banking and even motor insurance.
While many friendly societies are too small to benefit fully from the changes, the larger ones such as Liverpool Victoria, Royal Liver, and Family Assurance, do have the financial and administrative muscle, plus distribution channels to allow them to extend existing product ranges.
Liverpool Victoria owns Frizzell Bank and could potentially win approval to provide corporate banking and finance services. Marion Poole, director general of the Association of Friendly Societies, said the changes would be a positive development for friendly societies and their members.
She added it will mean friendly societies will be able offer a range of financial services only limited by their ability to innovate. She said: "This ought to strengthen friendly societies and improve their competitive position and enable them to expand into new fields, and that means more and better product to sell for their IFAs."
John Reeve, chief executive at the Family Assurance said: "What it means is that innovations that happen in the market place, some of which we will copy and some lead with, will become much easier for us to introduce."
He predicted the most significant developments could come in providing internet services, managing funds for the charity sector, and providing banking services for their members.
‘Important to have an anchor’
Report to be written by TPR
Lack of innovation for solutions
Some 2,000 consumers affected