The PRA has today published a new consultation on the amalgamations and transfers of friendly societies, which form an important part of healthy market dynamics within the insurance sector.
The proposals aim to improve clarity and accessibility of the Part VIII process which should, in turn, help facilitate transactions where these are in the interests of members and reduce the costs associated with such transactions.
Cara Spinks, head of life and health at independent insurance consultancy Broadstone, commented: “The PRA’s proposals are a practical step towards removing barriers to consolidation and growth across the friendly society and wider mutual sector. Amalgamations and transfers can enable mutuals to build scale, strengthen their financial resilience and secure better long-term outcomes for members, but uncertainty around the process can otherwise make transactions difficult to pursue, particularly for smaller firms.
“By providing greater clarity on the typical sequence of a Part VIII transaction and how the PRA will exercise its discretion, the proposals should help firms identify issues earlier to reduce avoidable delays and costs. This could make it easier to progress transactions that are demonstrably in members’ interests, while preserving the safeguards needed to protect policyholders.
“This is also important in the context of the government’s ambition to double the size of the mutual and co-operative sector. Delivering that ambition will require a regulatory framework that supports mutuals not only to grow organically but also to consolidate and build stronger organisations with the scale to compete effectively. A clearer and more proportionate Part VIII process can help retain members and assets within the mutual sector and support the creation of larger, more resilient organisations.”
