The society has hired solicitors Taylor & Emmett to produce a report on the circumstances leading to the imposition of the levy, caused by losses on property investments.
The society was forced to levy 12 per cent on all its 70,000 policies last year to make up for losses on investments made through its Capital Secure Fund and to pay for a possible extra pounds 2m tax liability on lump sum payments made into policies. A subsequent hearing in the High Court found that the imposition of a levy on policies would need a change in the rules of the society.
All the society's members will be given the opportunity to vote on the rule change at an AGM due before May.
Mike Booth, administration manager of the society, said that if the members took a decision to vote against the rule change, the society would become insolvent.
He added that policy-holders would then be able to claim on the friendly societies' own insurance against insolvency. 'Any claim on the insurance only pays out a maximum of 90 per cent,' he said.Reuse content