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What Is A Mutual?

26.03.2018 by Jim Ker

Kingston Unity Friendly Society is a mutual – but what is a mutual? What are the benefits? Well, it’s all about members joining forces to get better benefits for all.

Most people have an awareness of building societies and co-operatives but may not associate them with being a mutual. Like ourselves (a Friendly Society) they share the common traits of what it is to be a mutual – they are all owned by their members and are run for their benefit. They don’t have shareholders to pay, so profits get paid straight back to their members through bonuses and benefits. It’s that mutuality that sets these organisations apart from the large corporate banks.

The mutual sector also includes many more different types of organisations like credit unions, clubs, housing associations and specialist bodies such as football supporter trusts and community mutuals. Even in the public sector, services such as the NHS Foundation Trusts, Leisure Trusts, Co-operative Schools and Community Housing Schemes are all mutuals so they are all owned and run for their members and with no shareholders to pay giving them the freedom to focus on what really matters; Their members’ needs.

A Brief History

Mutuality is certainly not a new concept, it has been around for hundreds of years and can even be traced back to Roman times.

Born out of one simple idea; everyone contributing to a mutual fund from which workers could receive support should they fall on hard times. Originally when someone was unable to work due to ill health or old age, the rest of the workers would collect coppers together to help them out in their time of need. In time, instead of collecting when necessary, contributions became regular so that money was already in the kitty when it was required.

Whilst the benefits of pooling money in such a way might seem logical and of benefit to society, Friendly Societies were perceived by some as decidedly less than friendly. Some were classed as illegal organisations or secret societies prior to 1793. Once the Government passed legislation relating specifically to mutual organisations, they began encouraging membership and by the late 1800s they began to represent specific trades and professions resulting in around 27,000 registered mutual societies in the UK.

Today the mutual ethos is as strong as ever, encouraging people to work together and take better control of their finances through member ownership, collective investment and member benefits. Many of the smaller mutuals have merged or closed. However, there are still 300 to choose from.

What are the benefits of being part of a mutual?

Excellent service – It is common for mutual societies like us to have a higher level of satisfaction than other banking organisations by delivering consistently better customer experience to its members. Our members are everything to us, and we aim for 100% member satisfaction by giving a personalised, friendly service. Because we don’t have shareholders to pay, our focus is on the needs of members and ensuring that they receive excellent customer service with very few complaints..

Have your say – Because they’re owned and run for their members benefit, members also have a say in how a mutual is run. Every year they can vote in the Annual General Meeting and help shape the future of the Society. Members will have the opportunity to vote on who makes up the Board of Directors and issues at the heart of the Society. Another way our members ensure their voice is heard is through our Member Panel. You can find more about how to become involved in the Member Panel here.

Trust and fairness – Mutuals have been providing financial and social support to their members for centuries. At a time when so many are losing their faith in banks and big financial institutions, consumers are looking for socially responsible and financially viable organisations like mutuals, knowing that their money is going to be safe and well looked after.

Well established – Some of the oldest mutuals have over 100 years’ experience and a strong, proud heritage of supporting their members and the communities in which they live – We’ve been looking after our members, their children and grandchildren’s money for over 175 years.

Beneficial for the economy – Financial mutuals apply competitive pressure on profit-seeking companies. So during times of financial crisis such as the recession, the stable mutual sector protects the UK economy from large fluctuations experienced in stock markets and the majority of their assets are reinvested in bonds, shares and property in the UK markets.

Tax Free Savings – As well as being able to offer tax efficient savings like ISAs and Junior ISAs, Friendly Societies are also able to offer Tax Exempt Savings Plans for both adults and children. You can save up to a maximum of £25 a month or £270 a year tax free on top of your ISA allowance. These plans have a minimum term of ten years, but many take out plans for far longer, such as 18 years to pay towards higher education. Some families take out a plan for each member in order to fund university fees with policies maturing in different years.

Protection – Mutual societies are authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. They are also covered by the Financial Services Compensation Scheme (FSCS), which offers protection if they are unable meet their obligations, so if the worst happens and for some reason they were unable to pay you then you may be entitled to compensation from the scheme.

Stronger when we work together – Kingston Unity and many other mutuals are members of the Association of Financial Mutuals (AFM). The AFM is the professional, trustworthy, authoritative trade body, committed to protecting and progressing the principles of mutuality. They endeavour to promote a better understanding of mutuals, encouraging mutual support and mutual approaches to business and public policy.

The future of mutuals

Whilst the world has changed dramatically since the 1800s, the service offered by mutuals is as relevant if not more so than ever before. Particularly with the damaged reputation of a mistrusted banking industry and uncertainty over how the United Kingdom will fayre as it breaks away from the European Union.

Our aim during what is likely to be a further period of uncertainty is to ensure our members remain stronger as a group and retain access to the benefits they need when they need them most, remaining true to our heritage and traditions whilst also looking to the future with our members’ investment bonds, ISA’s and tax exempt savings schemes.

Please Note: You must confirm you have read the key facts, before downloading this document.

Key Facts about our services and costs

1. The Financial Conduct Authority (FCA)

The FCA is the independent watchdog that regulates financial services. This document is designed by the FCA to be given to consumers buying certain financial products. You need to read this important document. It explains the service you are being offered and how you will pay for it.

2. Whose products do we offer?

We offer products from the whole market

We only offer products from a limited number of companies

We only offer our own products

3. Which service will we provide you with?

We will advise and make a recommendation for you after we have assessed your needs.

You will not receive advice or a recommendation from us. We may ask some questions to narrow down the selection of products that we will provide details on. You will then need to make your own choice about how to proceed.

We will provide basic advice on a limited range of stakeholder products and in order to do this we will ask some questions about your income, savings and other circumstances but we will not:

  • conduct a full assessment of your needs;
  • offer advice on whether a non-stakeholder product may be more suitable.

We can only offer products from Kingston Unity Friendly Society. These products will enable you to:

  • protect yourself and your loved ones in the event of death
  • save and invest with the added benefit of protecting yourself and your loved ones in the event of death
  • provide benefit cover in the event of sickness

4. What will you have to pay us for our services?

Normally, if you buy a financial product direct from us, there will be no payments such as commission or fees payable. If there are any commission or fees payable, we will tell you how we get paid and the amount before we carry out any business for you.

5. Who regulates us?

Kingston Unity Friendly Society, 9 Navigation Court, Calder Park, Wakefield, WF2 7BJ is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and .the Prudential Regulation Authority. Kingston Unity Friendly Society’s FCA Registered Number is 110056.

Kingston Unity Friendly Society permitted business is advising and arranging life assurance and pensions business.

You can check this on the FCA’s Register by visiting the FCA’s website www.fsa.gov.uk/register or by contacting the FCA on 0845 606 1234.

6. What to do if you have a complaint

If you wish to register a complaint, please contact us:
…in writing Write to Kingston Unity Friendly Society, Complaints Department, 9 Navigation Court, Calder Park, Wakefield, WF2 7BJ. …by phoneTelephone (01924) 240164

If you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service.

7. Are we covered by the Financial Services Compensation Scheme (FSCS)?

We are covered by the FSCS. You may be entitled to compensation from the scheme if we cannot meet our obligations. This depends on the type of business and the circumstances of the claim.

Most types of insurance business are covered for 90% of the claim with no upper limit.