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Following the Mutuals Landscape report published jointly by the FCA and PRA in 2025 the PRA has issued a discussion paper considering the extent to which the regulatory regime for building societies remains proportionate and explores how credit unions can expand access to financial services and improve outcomes for their members.
Some of the proposals put forward include:
- removing some requirements on internal audit and regulatory documents for smaller credit unions, cutting red tape without compromising stability;
- creating a risk-based framework for larger, more complex credit unions, giving them more flexible capital requirements;
- applying relevant rules for smaller deposit takers, such as the standardised approach for risk weighted assets, to replace the current simple leverage ratio they report on;
- applying a simplified version of the Basel framework, streamlining capital add-ons for large credit unions with specific exposures, and applying a simple capital buffer for absorbing shocks in stress periods;
- considering barriers there are to credit unions offering new products and services, including how shared-service organisations and third-party organisations can best support investment, technology and operational capability;
- giving credit unions additional guidance on FCA expectations around working with third-parties to provide important services; and
- reviewing the current framework for solvent exit, providing further flexibility to transfer business or restructure in an orderly manner.
The paper is open for discussion until Friday 5 March 2027.
About the author(s)
Duncan is a Principal Associate in the Funds and Financial Services team specialising in financial services regulation.
Duncan advises clients across a wide range of sectors including banking, consumer finance, payment services, insurance, asset management and pensions with a particular focus on retail banking, regulated credit and payment services.