The Prudential Regulation Authority has launched a consultation on how friendly societies carry out amalgamations and transfers, proposing a clearer, more structured process for transactions it said play an important role in healthy market dynamics across the insurance sector.
The consultation paper, CP12/26, which was published on July 22, set out proposed changes to Chapter 4 of the PRA's statement of policy SoP 3/15, which governs it approach to insurance business transfers. That chapter deals specifically with amalgamations and transfers carried out under Part VIII of the Friendly Societies Act 1992.
The PRA said industry feedback, including through roundtables, indicated firms often need external advisers to interpret and navigate the requirements, and that the process can appear complex, particularly for smaller societies with limited prior experience of it.
Rather than changing the underlying law, the proposals aim to codify and reorganise the PRA's existing supervisory practice, setting out a typical sequence of steps while preserving flexibility for firms to depart from it where appropriate. The PRA has broken the process into five parts: planning and preparation, recording and analysing the transfer, member engagement and member votes, formal application and public notices, and confirmation assessment meetings.
Within that sequence, the PRA proposed concrete minimum timeframes for the first time. The deadline for written or oral representations should normally fall no earlier than six weeks after a public notice is published, giving affected members and policyholders time to consider a proposal, take advice and decide whether to respond.
The Representations Hearing itself should then normally take place no fewer than two days after that deadline closes.
Meanwhile, the regulator is also renaming two stages of the process, replacing "Pre-Confirmation Hearing" with "Representations Hearing" and "Confirmation Hearing" with "Confirmation Assessment Meeting," to better describe their purpose.
The consultation also addressed two areas of discretion firms have flagged as particularly unclear. The first is when the PRA might dispense with the requirement for a transferee society to hold a member vote, instead allowing approval by its committee of management.
The PRA said it would weigh whether the benefit to members of voting is outweighed by the cost of holding that vote, and proposes to set out in more detail the factors and evidence it would expect firms to provide when applying for such a dispensation.
The second is when the PRA might direct firms to appoint an independent actuary to report on a proposed transfer's terms and its likely effect on relevant policyholders. The PRA proposed that it would generally be less likely to require an independent actuary's report where both parties are Category 4 firms, its smallest regulatory classification, and to set out new detail on the actuarial analysis and supporting evidence firms should provide to demonstrate that a transfer is in members' interests.
Separately, the PRA proposed to confirm that where a transferee is not itself a friendly society, it would still be expected to comply with its own rules or governance framework, so transactions are assessed consistently regardless of legal form, and that starting a Part VIII process does not pause a firm's other regulatory obligations, including solvent exit planning where relevant.
The consultation builds on the PRA and Financial Conduct Authority's joint Mutuals Landscape Report, published in December 2025, in which the PRA said it wanted to support long-term, sustainable growth of the mutual sector. It also sits alongside a separate Law Commission review, launched at HM Treasury's request in 2025, examining potential reforms to the Friendly Societies Acts of 1974 and 1992.
The PRA said it would continue to engage with the Law Commission and stood ready to update its policy further if that broader legislative review leads to changes.
Cara Spinks, head of life and health at consultancy Broadstone, said the proposals were "a practical step towards removing barriers to consolidation and growth across the friendly society and wider mutual sector," adding that uncertainty around the process can otherwise make transactions difficult to pursue, particularly for smaller firms.
The regulator expects the direct costs of its proposals to be limited, since they are intended mainly to add clarity rather than introduce new requirements. It also assessed the changes against its secondary competition and growth objectives, concluding that reducing informational barriers should make it easier for smaller or less experienced firms to pursue restructuring, and for non-viable societies to exit the market in an orderly way.
The PRA is accepting responses until 22 October 2026 and plans to hold a roundtable with insurers, legal and actuarial firms, and trade bodies during the consultation period, ahead of a final policy statement expected before April 2027.
