What is a Friendly Society?
- October 7, 2021
- Posted by: Kalina Ilarionova
- Category: TFS News
Financial services organisations come in many different business models, such as building societies, co-operatives, friendly societies, banks, insurance companies, assurance companies, asset managers and credit unions and it can be difficult to understand exactly how they differ.
Friendly societies are one of the oldest types of financial services organisations out there, and Transport Friendly Society (TFS) is one of them. But what does that mean?
What is a Friendly Society?
Even though friendly societies have been around for hundreds of years, there is still confusion about what a friendly society actually is.
According to Collins Dictionary, a friendly society is an organisation to which people regularly pay small amounts of money and which then gives them money when they retire or when they are ill.
Friendly societies may take different forms, including mutuals, benefit societies or benevolent societies. They all have no public or private ownership – they are owned by their members, so there is a “mutual interest”.
Friendly societies are registered under either the Friendly Societies Act 1974 or the Friendly Societies Act 1992. TFS is registered and incorporated under the Friendly Societies Act 1992.
What does it mean to be a member?
Membership is given when a product is taken out with the friendly society, and the customer becomes a member. This could often be a long-term savings product or similar.
All the organisation’s profits are for the benefit of its members. Often, there are free additional benefits provided to members or extra bonuses added onto their savings.
Members also get certain rights such as having a say on how the business is run. This would often include voting on key business decisions at the organisation’s Annual General Meeting.
Friendly Societies back then VS now
Most friendly societies started as locally based groups,
where members would contribute small payments each
week/month, so that they would receive a lump sum
payment in times of need.
The first Friendly Society was a fire insurance association,
started at the time of the Great Fire of London in 1666. Its
name was adopted to describe all mutual aid organisations
throughout the UK. They could last for a year or continue
for many. Some, such as TFS, still exist today.
TFS started in 1885 by providing peace of mind to bus
drivers, who in exchange for a penny or two per week,
knew that if they died while working on the buses, their
loved ones would have some money to help them pay for
Our principles are the same today as when we first started.
TFS is still providing that peace of mind through our Sickness,
Tax-Free Savings, Health Cash Plans and ISAs; putting our
members at the heart of everything we do.
Find out more about mutual organisations and mutuality in our dedicated post.