Firstly, friendly societies, such as Sureplan, are comprised of multiple benefit funds and the assets of each fund, by law, must be quarantined or separated. The assets of a fund can only be used for the payment of benefits to members of that fund and all net earnings must be retained in that fund for the benefit of members. Therefore, assets cannot be moved from fund to fund for the purpose of say improving the performance of one fund. This is compared to life company funeral insurance in which the premiums are normally paid into a central pool managed by the life company.
Secondly, the rules of each fund operated by a friendly society must receive Australian Prudential Regulation Authority (APRA) approval and when doing this APRA must act in the best interest of members. This removes any chance that the rules of a fund can be changed to reduce member benefits unilaterally by a friendly society.
This unique “benefit fund” structure that ensures the assets of a fund are segregated from other assets of the society, together with the broader authority possessed by APRA does result in a higher relative level of protection for consumers of friendly societies compared to consumers of other institutions.