<--- Back to contents

Chapter 12 - Consumer Law

Friendly societies

Friendly societies are governed in terms of the Friendly Societies Act (No 25 of 1956). A friendly society, also sometimes called a benefit society, is an association which does not have profit as an objective. It invites people to become members of the association. A member pays to belong to the association and in return the association provides benefits, relief or maintenance to its members by:

• granting annuities
• contributing to medical costs
• insurance cover for births, funerals and fire
• compensation for loss of employment.

In other words, benefits could be claimed for sickness, retirement, education, birth of a baby, funeral and medical expenses, unemployment and even financial loans.

To get the benefits promised, the person pays to become a member of the association and also pays a certain amount each month.

Friendly societies must be registered with the Registrar of Friendly Societies. A friendly or benefit society which is not properly registered can be criminally charged.

Problems with friendly societies

• Sometimes friendly societies collect money for a few months and then close down. Members will then not be able to claim any of the benefits that they have promised.
• The friendly society might also close down suddenly and open up again with a new name. If the society opens up with a new name, members have to start paying all over again to qualify for benefits.
• Some friendly societies only give benefits if the society decides to do so. They do not give benefits automatically. This causes many problems because people who pay into the friendly society are confused about the benefits they may receive.

Where members have suffered losses as a result of fraudulent behaviour on the part of a friendly society, they can bring a private civil action for damages against the society. If a friendly society acts fraudulently towards its members it can also be criminally charged.

It is always important to check whether a friendly society is registered in terms of the Friendly Society Act before signing on as a member. Ask to see their Registration Certificate. Also read the association’s rules and agreement very carefully before signing.

See Problem 14: Misunderstanding the benefits of a friendly society.