Friendly merger on the cards
The Friendly Societies of Australia (FSOA) is to outsource its adminis_tration services to ABACUS, which could be the precursor to a merger between the two associations.
FSOA president Chris Wright said the two associations have worked together closely in the past on a number of issues.
“Our executive director Jane Southwell wanted to move on and the decision was made to outsource the association’s office,” he said.
“The mutual nature of ABACUS’ members fits well with our own membership and joining together at some point will be on the cards.”
FSOA has 28 member societies including IOOF, Australian Unity, Lifeplan and Austock Life. It has $8.4 billion in assets according to the 2007 association’s annual report and 1.6 million clients.
ABACUS has 151 members made up of credit unions and mutually owned building societies. Its mem_bers, based on September 2006 fig_ures, have $58.8 billion in deposits.
Wright said a merger between the two associations would bring a number of benefits and that there were few obstacles to an agreement being struck.
“The only real issue is that two of our members are not mutuals, which is a requirement of being a member of ABACUS,” he said.
“IOOF and Over Fifties are no longer mutuals and there would have to be some discussion on how these two organisations could be included.”
Wright said friendly societies stood up well in the recent financial tur_moil.
“Societies are reporting that they are trading well and have not been hit by the issues affecting the rest of the financial services industry,” he said.
“They are holding their own, although the value of their funds under management has fallen due to reduced earnings.”
Friendly societies generally have either no or very low levels of gear_ing, which has protected them from the credit crunch.
Wright said the societies were in better shape this time compared to the last major economic downturn at the beginning of the 1990s.
“Friendly societies are now sub_ject to the same regulatory regime as the rest of the financial servic_es industry and all are closely monitored,” Wright said.
“The reporting systems are stronger, so we won’t see a repeat of the events of 1990 and 1991.”
AUTHOR
Mike Taylor
Recommended for you
Shadow financial services minister, Luke Howarth, has stressed the Coalition’s commitment to reforming the CSLR, adding that he ultimately wants to “get rid of it”.
With just over three weeks until the federal election, the FAAA has put a reduction in red tape and further support for new entrants on its priority list for an incoming government.
The corporate regulator has issued infringement notices to three AFSLs whose financial advisers provided personal advice to a retail client while unregistered.
Rather than taking a controlling approach, the latest generation of overseas private equity deals is helping advice firms to achieve their growth ambitions, three commentators have said.
