37 Restriction on combinations of business.U.K.
(1)[F1Subject to subsections (1A) and (7A) below], an authorised friendly society to which subsection (2) or (3) below applies may not carry on business falling into more than one of the following categories, namely—
(a)long term business;
(b)general business; and
(c)non-insurance business;
and, accordingly, the Commission shall not grant such a society authorisation to do so.
[F2(1A)Nothing in subsection (1) above shall prevent an authorised friendly society to which subsection (2) or (3) below applies from carrying on, or being authorised to carry on, both long term business and general business of either or both of classes 1 and 2 of Head B of Schedule 2 to this Act.]
(2)This subsection applies to a friendly society which carries on long term business—
(a)if its rules do not contain provision for calling up additional contributions, for reducing benefits or for claiming assistance from other persons who have undertaken to provide it; or
(b)if its annual contribution income from long term business exceeded 500,000 ECU for 3 consecutive years and it is not the subject of a direction under subsection (5) below;
and, for the purposes of paragraph (b) above, years ending before 1st January 1985 shall be disregarded.
(3)This subsection applies to a friendly society which carries on general business—
(a)if its rules do not contain provision for calling up additional contributions or for reducing benefits; or
(b)if its annual contribution income from general business in any previous year exceeded 1,000,000 ECU and it is not the subject of a direction under subsection (5) below;
and, for the purposes of paragraph (b) above, years ending before 1st January 1993 shall be disregarded.
(4)In subsections (2) and (3) above a reference to a year, in relation to annual contribution income, is a reference to any financial year of a society for which, at the relevant time, accounts have been or ought to have been prepared.
(5)The Commission may, if it is satisfied that it is consistent with the international obligations of the United Kingdom to do so, direct that a friendly society—
(a)which is, by virtue only of paragraph (b) of subsection (2) above, a society to which that subsection applies; or
(b)which is, by virtue only of paragraph (b) of subsection (3) above, a society to which that subsection applies;
shall, unless the direction is revoked, be treated as not being a society to which subsection (2) or, as the case may be, subsection (3) above applies.
(6)If—
(a)the Commission has given a direction under subsection (5) above in relation to a society such as is mentioned in subsection (5)(a) above; and
(b)the society’s annual contribution income from long term business exceeds 500,000 ECU for 3 consecutive years ending after a date specified in the direction,
the Commission shall revoke the direction.
(7)If—
(a)the Commission has given a direction in relation to a society such as is mentioned in subsection (5)(b) above; and
(b)the society’s annual contribution income from general business in a year ending after a date specified in the direction exceeded 1,000,000 ECU,
the Commission shall revoke the direction.
[F3(7A)Where a friendly society to which subsection (2) or (3) above applies was on 15th March 1979 carrying on long term and general business in the United Kingdom, the society may (if authorised to do so) carry on any class (or part of a class) of long term or general business.
(8)Where a friendly society to which subsection (2) or (3) above applies is authorised by virtue of subsection (1A) or (7A) above to carry on long term and general business in the United Kingdom—
(a)the Commission shall (whether or not other conditions are imposed) impose such conditions on the society’s authorisation as the Commission thinks fit for securing that the society’s long term business and general business are kept separate; and
(b)those conditions shall, subject to the exceptions mentioned in subsection (9) below, require that the assets representing the funds maintained in respect of the society’s long term business or, as the case may be, its general business are to be generally applicable for the purposes of that business only.]
(9)The exceptions mentioned in subsection (8) above are—
(a)that assets representing funds in respect of long term business may be transferred so as to be available for general business if—
(i)they represent the excess of the long term business funds over the society’s liabilities in respect of that business; or
(ii)the transfer is by way of reimbursement of expenditure borne by other assets in respect of long term business; and
(b)that assets representing funds in respect of general business may be transferred so as to be available for long term business if they represent the excess of the general business funds over the society’s liabilities in respect of that business.
Textual Amendments
F1Words in s. 37(1) substituted (1.1.1994) by S.I. 1993/2519, reg. 3(1)
F2S. 37(1A) inserted (1.1.1994) by S.I. 1993/2519, reg. 3(2)
F3S. 37(7A)(8) substituted (1.1.1994) for s. 37(8) by S.I. 1993/2519, reg. 3(3)
Modifications etc. (not altering text)
C1S. 37(4) excluded (1.5.1993) by S.I. 1993/932, reg. 7
Commencement Information