An Introduction to Friendly Societies

Whether you keep your money in a bank, a building society or an investment app, every way of saving comes with a list of potential benefits and downsides. To make the best choices with your savings, you should be aware of every option available to you. 

Here at Sheffield Mutual, we’re what’s called a Friendly Society.

Despite the name, being friendly isn’t the only thing we have to offer. Throughout this article, we will be introducing you to our Friendly Society by covering topics like:

• What is a Friendly Society?

• When did Friendly Societies start?

• What are the benefits of being a member of a Friendly Society?

• Who regulates Friendly Societies?
  
  

What Is A Friendly Society?

Friendly Societies like Sheffield Mutual provide financial benefits, such as savings, investment or insurance policies. 

A Friendly Society is owned by its members, unlike banks and large insurers, which are owned by Shareholders. The profits of a Friendly Society are distributed to its members in the form of bonuses or are reinvested for their benefit.

Although Friendly Societies initially began as a way of serving their local community, their reach has broadened over time, and now Friendly Societies are able to serve members from all around the country.

When Did Friendly Societies Start?

The idea that community members would work together to support one another has been around for a long time. However, during the 18th century, just after the Industrial Revolution, organised Friendly Societies started becoming popular in the UK.

The world started modernising rapidly during this period. A single machine might be able to do the work of twenty people, reducing the workforce's size. It could also cause serious injuries, leaving some remaining labourers unable to do their jobs.

By working together, these workers realised they could protect themselves and their communities from sickness, injury and challenging economic conditions.

Thus, the idea of a modern Friendly Society was born.

Sheffield Mutual was founded in 1863 as the Sheffield District of The Order of The Druids Friendly Society. Since then, we’ve updated our name and way of working, but we’re still committed to providing the best possible support to all our members.

Working people have always organised friendly societies and run them for their benefit. Our members, not shareholders, own us.

What Are The Benefits Of Being A Member Of A Friendly Society?

Because Friendly Societies are different from regular banks or businesses, we can offer unique benefits to our members.

Profit Sharing

The first benefit is that our members share directly in our profits. This means that, in addition to the ‘sum assured’ guaranteed at the beginning of many of our savings schemes, our members can also benefit from bonuses based on market performance and profit sharing.

Unique Products

The second benefit is our offerings. Because we operate for the benefit of our members and not shareholders, we are able to offer unique products like our Tax Exempt Savings Plans that banks and other businesses cannot.

Products like these allow our members to make additional tax-free savings on top of their annual ISA allowances while earning bonuses along the way, something that you can only get by being a member of a Friendly Society.

Level Of Service

At Sheffield Mutual, exceptional customer service is at the heart of everything we do. Because we aren’t owned by investors or shareholders, our focus is solely on meeting the needs of our members. 

We take pride in delivering a high standard of personal service, offering tailored solutions to support our members’ financial goals. We’re always exploring new ideas, products, and ways of working to help our members make the most of their money, today and in the future.

Who Regulates Friendly Societies?

Friendly Societies are currently regulated by two different authorities: the Prudential Regulation Authority and the Financial Conduct Authority.

Prudential Regulation Authority

The Prudential Regulation Authority is part of the Bank of England.

It’s the job of the PRA to create policies for financial institutions to follow and supervise those institutions to ensure they operate in a safe and sound manner.

In addition, the PRA also attempts to understand what could happen in the event of regulatory changes or unexpected economic shifts, and helps businesses create contingency plans in case something goes awry.

Financial Conduct Authority

The Financial Conduct Authority is an independent body led by a board of directors and a Chief Executive Officer.

The FCA works on behalf of regular people. Its three primary responsibilities are to protect consumers, ensure a free and fair marketplace, and encourage competition amongst financial institutions.

Although the PRA and FCA collaborate on some parts of regulation, they are still two separate institutions. This means that there are always at least two regulatory bodies protecting our members and their investments.

Become A Member Of Sheffield Mutual Today

If you want to learn more about Friendly Societies, or are interested in how our products could help you save, you can learn about our history on our website, browse our products or contact a member of our friendly team today on 01226 741 000 (Mon-Fri 9 AM-5 PM) or by going online.

This blog provides generic information and the writer's opinions and should not be relied upon for investment decisions. Sheffield Mutual has provided no advice. If you doubt whether a savings or investment plan suits you, consider contacting a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk or www.vouchedfor.co.uk. Advisers may charge for providing such advice and should confirm any costs beforehand.