The Friendly Societies Act 1992 (Accounts) (Amendment) Order 2020

EXPLANATORY NOTE

(This note is not part of the Order)

This Order amends Part 6 of the Friendly Societies Act 1992 (“the 1992 Act”) which deals with the accounts of friendly societies.

Articles 2(6) and 3(4) insert new subsections 69A(4A) and 69A(4B), and 69E(5A) and 69E(5B) respectively into the 1992 Act, which brings the accounting treatment of friendly societies established under the 1992 Act into line with that of companies governed by Part 15 of the Companies Act 2006 insofar as friendly societies will be afforded the same flexibility to change from preparing individual or group accounts in accordance with international accounting standards to Friendly Society Act individual or group accounts. Articles 2(4), 2(7), 3(3) and 3(5) make the necessary consequential amendments.

Articles 2(2), 2(3), 2(5), and 3(2) make further amendments to align sections 69A and 69E of the 1992 Act with the corresponding sections 395 and 403 for companies in Part 15 of the Companies Act 2006—

• Articles 2(2), 2(3), and 3(2) prohibit friendly societies (or registered branches of friendly societies) that are charities from using international accounting standards for their individual or group accounts;

• Article 2(5) adds to the list of relevant changes of circumstance for the purpose of section 69A(4) a scenario in which a friendly society or a registered branch of a friendly society ceases to be a subsidiary undertaking; if such a scenario were to occur the friendly society or registered branch concerned would subsequent to this Order be permitted the same flexibility as a company to change from preparing individual or group accounts in accordance with international accounting standards to Friendly Society Act individual or group accounts.

A de minimis regulatory impact assessment has been prepared in relation to this Order. A copy may be obtained either from the Insurance and Pensions Markets team, HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ or via the Treasury website (www.hm-treasury.gov.uk).