What is a friendly society?

OneFamily is a friendly society, but what does that mean?

With a myriad of business models in financial services, it can be difficult to understand exactly how they differ.

There are building societies, co-operatives, friendly societies, banks, insurance companies, assurance companies, asset managers, credit unions. Some of these can be publicly owned and listed on the stock market, or privately owned by an individual or institution.

Friendly societies are one of the oldest types of financial services organisations out there, and we’re one of them. What does that mean?

What is a friendly society?

What is a mutual?

Mutuals are organisations that are owned by their customers. They can take different forms including building societies, friendly societies, co-operatives and credit unions. Mutuals have no public or private ownership – they are owned by their members so there is a ‘mutual interest’.

Like a shareholder-owned organisation, their focus is on delivering the best results for their owners. However, whereas with shareholder owned organisations that means extracting money out of the organisation in the form of dividends, for a mutual this means retaining profits within the organisation for members.

Membership is given when a product is taken out with the company, and the customer becomes a member. This could be a long-term savings product or similar. This gives them ownership of a percentage of the company- like a shareholder.

The percentage these members own in most cases this is very small, worth just pounds or pennies, but members get certain rights, including having a say on how the business is run. This generally will include voting on key business decisions and access to benevolent funds.

Find out more about mutuals in our dedicated post.

What are friendly societies?

Friendly societies have their roots in ancient Roman burial societies. Burial societies, as well as religious groups, political clubs, trade guilds and social clubs, originally provided funerals, cremations and burials for people who didn’t have family to do so.

Friendly societies grew in importance during the 19th century, being officially acknowledged by the Government in 1875, who called for proper registration and auditing.

Friendly societies pre-date the benefits system and the NHS, providing members and their families a financial cushion if they couldn't earn as a result of illness, accident or old age. Their membership was often known as ‘penny policies’ as workers contributed very small sums regularly for the benefit of the community.

There were originally three main types of friendly societies. Some were originally set up to with a focus on a certain type of worker – Dentists Provident Society and Railway Enginemen’s Assurance Society being good examples that still exist today. Others were for workers in a certain part of the country – Scottish Friendly and Liverpool Victoria being two of these.

Finally, some friendly societies were set up to address a certain social cultural need, an example being us - OneFamily.

We were formed from a merger between Family Investments (previously Family Assurance Friendly Society Limited) and Engage Mutual (previously the Homeowners Friendly Society Limited). We aim to address the financial needs of modern families.

Today’s friendly societies

The main difference to other mutuals is mainly historic, however friendly societies still have a unique legal status, which means they can offer some tax-exempt savings products that are not available from other financial institutions, such as our Family Bond and Junior Bond.

Today friendly societies offer members a wide range of affordable savings, investments, insurance, pensions and other retirement products.