The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have published a joint Mutuals Landscape Report setting out their plans to support the expansion of mutual societies, credit unions and co-operatives.

The measures form part of the government’s commitment to double the size of the mutuals sector and reflect rising political and regulatory interest in broadening the UK’s corporate mix.

REGULATORY REFORMS AND A NEW DEVELOPMENT UNIT

Among the most significant steps is the creation of an FCA Mutual Societies Development Unit, which will act as a central hub of expertise for mutuals navigating policy and legislative changes. The regulators said the unit will support co-operative networks and help societies collaborate and build long-term resilience.

The FCA will also offer free pre-application support to organisations seeking to establish or innovate within a mutual structure, and aims to reduce application processing times from fifteen to 10 working days.

The PRA confirmed that the Building Societies Sourcebook has been removed from its rulebook with immediate effect, signalling a move towards a more streamlined regulatory approach.

A review of credit union regulation is also under way, with a focus on more risk-based capital requirements for larger firms and proportionate rules for smaller ones.

The regulators also reaffirmed that their joint Scale-up Unit will be open to mutual firms, offering tailored support to eligible organisations looking to grow quickly in a tightly regulated market.

AFM RESPONSE AND INDUSTRY REACTION

The Association of Financial Mutuals welcomed the publication of the report, describing it as an important step towards unlocking the sector’s growth potential. The group highlighted the increasing recognition of the sector’s contribution to financial inclusion, consumer trust and market diversity.

Andrew Whyte, AFM chief executive, said: “We welcome the PRA and FCA’s recognition of both the mutual sector’s vital role in the UK economy and its significant growth potential.

“It’s also good to see the regulators’ commitment to a tailored regulatory approach that enables mutuals to compete effectively alongside firms with traditional corporate structures.”

He added: “This report outlines practical measures the regulators plan to take to support the sector and is an important first step.

“Together with our members, AFM looks forward to continuing to work with both regulators to turn their good intentions into action, strengthening the sector and enhancing the UK’s financial resilience.”

REGULATORS STRESS THE IMPORTANCE OF MUTUALS

Sam Woods, PRA chief executive and deputy governor at the Bank of England, said: “Mutuals are a vital part of our financial system. Today’s report examines how the financial mutuals sector is growing, and what we can do to help it thrive in the period ahead.”

FCA chief executive Nikhil Rathi emphasised the social and economic importance of mutual societies, noting their role in supporting homeownership, insurance, financial inclusion and community cohesion.

He said: “We want to help them grow, and our new Development Unit will provide dedicated support. We’re also making it faster for mutuals to start-up.”

Lucy Rigby, economic secretary to the Treasury, said: “We have committed to double the size of the mutuals sector, and are pleased the regulators are taking concrete steps to support the sector’s growth so it can deliver better value for members and communities.”

THE BROADER CONTEXT

Today’s announcements accompany ongoing reforms across the wider financial sector. These include proposals to streamline the Senior Managers and Certification Regime, the PRA’s Strong and Simple prudential rules for smaller firms, and the introduction of Solvency UK, intended to reduce regulatory burdens for insurers.

The FCA also pointed to its mortgage market reforms, adopted by 85% of lenders including building societies, which it said have enabled borrowers to access around £30,000 more.

The UK’s mutuals sector comprises 93 mutual insurers, 42 building societies and about 350 credit unions, representing more than 30 million members. A further 12 million memberships exist across more than 8,000 co-operative and community benefit societies, which collectively hold assets of more than £223 billion.