Friendly Societies Act 1992 (Amendment) Regulations 1994

JurisdictionUK Non-devolved
CitationSI 1994/1984
Year1994

1994 No. 1984

FRIENDLY SOCIETIES

The Friendly Societies Act 1992 (Amendment) Regulations 1994

Made 21th July 1994

Laid before Parliament 1st August 1994

Coming into force 1st September 1994

The Friendly Societies Commission, being a Department designated1for the purposes of section 2(2) of the European Communities Act 19722in relation to the authorisation of the carrying on by friendly societies of insurance business and the regulation of such business and its conduct and in relation to anything supplemental or incidental to such matters, in exercise of the powers conferred on it by that section and of all other powers enabling it in that behalf, hereby makes the following Regulations:

GENERAL

PART I

GENERAL

Citation, commencement and extent
S-1 Citation, commencement and extent

Citation, commencement and extent

1.—(1) These Regulations may be cited as the Friendly Societies Act 1992 (Amendment) Regulations 1994, and shall come into force on 1st September 1994.

(2) These Regulations extend to Northern Ireland.

Interpretation
S-2 Interpretation

Interpretation

2.—(1) In these Regulations–

the 1992 Act” means the Friendly Societies Act 19923;

“the commencement date” means 1st September 1994.

(2) In these Regulations expressions which are also used in the 1992 Act have the same meanings as in that Act.

FRIENDLY SOCIETIES COMMISSION

PART II

FRIENDLY SOCIETIES COMMISSION

Functions of Commission
S-3 Functions of Commission

Functions of Commission

3.—(1) At the end of subsection (4) of section 1 of the 1992 Act (Friendly Societies Commission) insert the words “or any provisions of the law of an EEA State other than the United Kingdom which give effect to the general insurance or life Directives”.

(2) After that subsection insert–

S-4A

4A There shall be conferred on the Commission by virtue of this subsection any functions required to be conferred on it by the general insurance or life Directives.

AUTHORISATION OF FRIENDLY SOCIETIES

PART III

AUTHORISATION OF FRIENDLY SOCIETIES

Authorisation to carry on business

Authorisation to carry on business

S-4 Grant of authorisation by Commission: general

Grant of authorisation by Commission: general

4. For subsection (4) of section 32 of the 1992 Act (grant of authorisation by Commission: general) substitute–

S-4

4 Authorisation entitles a friendly society to carry on business anywhere in the United Kingdom unless, in the case of a society which is not one to which section 37(2) or (3) below applies, the terms of its authorisation are at its request expressly restricted to a part of the United Kingdom.

S-5 Grant of unconditional or conditional authorisation

Grant of unconditional or conditional authorisation

5. In subsection (2) of section 34 of the 1992 Act (grant of unconditional or conditional authorisation), at the end of paragraph (a) insert the words “and, in the case of a society to which section 37(2) or (3) below applies, each controller of the society is a fit and proper person to be such a controller”.

Powers of Commission in relation to authorised societies

Powers of Commission in relation to authorised societies

S-6 Withdrawal of authorisation in respect of new business

Withdrawal of authorisation in respect of new business

6. In subsection (3) of section 40 of the 1992 Act (withdrawal of authorisation in respect of new business), omit the word “or” at the end of paragraph (f) and after paragraph (g) insert

or

(h)

(h) the society is a society to which section 37(2) or (3) above applies and has not effected any contracts of insurance, or any contracts of insurance of a class (or part of a class), for a period of six months or more.

S-7 Withdrawal of authorisation to carry on insurance business

Withdrawal of authorisation to carry on insurance business

7.—(1) In subsection (1) of section 41 of the 1992 Act (withdrawal of authorisation to carry on insurance business), for the words “in the United Kingdom”, in both places where they occur, substitute–

(i)

(i) in the case of a society to which section 37(2) or (3) above applies, in the European Community;

(ii)

(ii) in any other case, in the United Kingdom,

(2) In subsection (3) of that section, for the words from “during”, in the first place where it occurs, to “authorisation” substitute–

(a)

(a) in the case of a society to which section 37(2) or (3) above applies, during the preceding six months;

(b)

(b) in any other case, during a financial year of the society which began and ended during the currency of the authorisation,

(3) In sub–paragraph (1) of paragraph 11 of Schedule 13 to that Act (authorisation: supplementary provisions), after paragraph (c) insert–

(d)

(d) in the case of a direction given in relation to a society to which section 37(2) or (3) above applies which is or has been–

(i) carrying on insurance business in an EEA State other than the United Kingdom through an overseas branch in that State, or

(ii) providing insurance in an EEA State other than the United Kingdom through an establishment in another EEA State,

notify the supervisory authority in that State, or, as the case may be, in each of those States of the direction.

REGULATION OF BUSINESS

PART IV

REGULATION OF BUSINESS

Financial resources

Financial resources

S-8 Margins of solvency

Margins of solvency

8. In subsection (1) of section 48 of the 1992 Act (margins of solvency in relation to insurance business of certain societies), in paragraphs (a) and (b) the words “in the United Kingdom” shall cease to have effect.

S-9 Adequacy of assets

Adequacy of assets

9. After section 49 of the 1992 Act insert—

Adequacy of assets and premiums(49A) Adequacy of assets.(1) A friendly society to which section 37(2) or (3) above applies which has entered into contracts of insurance shall secure–(a) that its liabilities under those contracts, other than liabilities in respect of linked benefits, are covered by assets of appropriate safety, yield and marketability having regard to the classes of business carried on; and(b) without prejudice to the generality of paragraph (a) above, that its investments are appropriately diversified and adequately spread and that excessive reliance is not placed on investments of any particular category or description.(2) A friendly society to which section 37(2) above applies which has entered into a linked long term contract shall secure that, as far as practicable, its liabilities under the contract in respect of linked benefits are covered as follows–(a) if those benefits under the contract are linked to the value of units in an undertaking for collective investments in transfer– able securities or to the value of assets contained in an internal fund, by those units or assets;(b) if those benefits under the contract are linked to a share index or other reference value not mentioned in paragraph (a) above, by units which represent that reference value, or by assets of appropriate safety, yield and marketability which correspond, as nearly as may be, to the assets on which that reference value is based.(3) A friendly society to which section 37(2) above applies which has entered into a linked long term contract shall also secure that its liabilities under the contract in respect of linked benefits are covered by assets of a description prescribed by regulations under section 56 below.(4) In this section–“linked benefits”, in relation to a linked long term contract, means benefits payable under the contract which are determined by reference to the value of or the income from property of any description (whether or not specified in the contract) or by reference to fluctuations in, or in an index of, the value of property of any description (whether or not so specified);“linked long term contract” means a contract the effecting of which constitutes the carrying on of insurance business falling within class III in head A in Schedule 2 to this Act.

S-10 Adequacy of premiums in respect of long term insurance

Adequacy of premiums in respect of long term insurance

10. After section 49A of the 1992 Act insert—

S-49B

Adequacy of premiums in respect of long term insurance.

49B.—(1) Before entering into a contract the effecting of which constitutes the carrying on of long term business, a friendly society to which section 37(2) above applies shall satisfy itself that the aggregate of–

(a)

(a) the premiums payable under the contract and the income which will be derived from them; and

(b)

(b) any other resources of the society which are available for the purpose,

will be sufficient, on reasonable actuarial assumptions, to meet all commitments arising under or in connection with the contract.

(2) A friendly society to which section 37(2) above applies shall not rely on other resources for the purposes of subsection (1) above in such a way as to jeopardise the solvency of the society in the long term.

Criteria of prudent management

Criteria of prudent management

S-11 Criteria of prudent management

Criteria of prudent management

11.—(1) For the eighth criterion in subsection (3) of section 50 of the 1992 Act (the criteria of prudent management) substitute–

S-8

8 In the case of a society to which section 37(2) or (3) applies, direction and management which, in addition to satisfying the other requirements as to direction and management, is such as to secure compliance with any obligation imposed on the society by any provision (whether of the law of any part of the United Kingdom or of the law of another EEA State) which–

(a) gives effect to the general insurance or life Directives; or

(b) is otherwise applicable to the insurance activities of the society.

(2) Regulation 2(2) of the Friendly Societies (Amendment) Regulations 19934(which is superseded by paragraph (1) above) shall cease to have effect.

Powers of Commission

Powers of Commission

S-12 Application to court

Application to court

12. In subsection (2) of section 52 of the 1992 Act (application to court), for paragraph (c) substitute–

(c)

(c) that the society...

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