PRA and FCA Explore Reforms to Support Credit Union Growth

03/11/2026

The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have published a joint discussion paper exploring potential changes to the regulatory framework for credit unions, with a focus on supporting sustainable growth, encouraging innovation and improving outcomes for members.

Published on 3 November 2026, Credit Unions: Supporting sustainable growth and resilience follows the regulators’ 2025 Mutuals Landscape report and considers whether the existing framework remains appropriate for an increasingly diverse credit union sector.

The PRA and FCA are seeking views on a range of potential reforms, including:

• Proportionate regulation for smaller credit unions: Exploring opportunities to remove certain internal audit and regulatory documentation requirements to reduce administrative burdens while maintaining appropriate safeguards.
• A more flexible framework for larger credit unions: Considering a more risk-based approach to prudential requirements, including greater flexibility around capital requirements for larger and more complex organisations.
• Changes to capital requirements: Exploring alternatives to the current leverage ratio, including approaches used for smaller deposit-taking firms and a simplified version of the Basel framework.
• Supporting innovation and new services: Considering barriers to developing new products and services, alongside the role shared-service organisations and third-party providers could play in supporting investment, technology and operational capability.
• Reducing regulatory costs: Exploring whether changes to FCA fees could help reduce costs and support sustainable growth.
• Future development of the sector: Considering options for credit unions to convert into building societies and reviewing arrangements for solvent exit, including greater flexibility to transfer business or restructure in an orderly manner.

Commenting on the discussion paper, All Together Money Chief Executive, Matt Bland said: “We welcome the publication of this discussion paper and are excited by the opportunities it presents to shape a regulatory framework that better supports the future of the credit union movement. It is a positive step forward, recognising the potential for credit unions to grow, innovate and reach more people while maintaining the strong protections that members rightly expect.

“It is important that this work is developed in partnership with the credit union sector. We will work closely with our members and the regulators to ensure that the framework supports credit unions of different sizes, ambitions and business models, enabling them to grow sustainably and deliver even more for their members and communities.

“This is particularly exciting given the wider momentum behind the sector. The Government’s ambition to double the size of the co-operative and mutual sector, the development of the Credit Union Sector Growth Plan, the £30 million Credit Union Transformation Fund and the recent expansion of Help to Save announced in the Autumn Budget all present opportunities to strengthen the role credit unions play in financial inclusion and the wider economy.

“Taken together, these developments provide real grounds for optimism. We now have an opportunity to ensure that the regulatory environment, alongside Government policy and investment, creates the right conditions for credit unions to fulfil their potential. We look forward to working with the sector, the regulators and Government to help turn that ambition into reality.”

All Together Money will continue to work closely with the PRA and FCA as the discussion progresses, ensuring that members have opportunities to contribute to the debate and that the potential implications of any future changes are fully considered.

Credit unions will also have an opportunity to hear directly from senior representatives of the FCA at All Together Money’s upcoming combined Growth and Pioneer Group event on 17–18 November in Sheffield. The session will provide an opportunity to discuss the paper, ask questions and share experiences directly with the regulator.

Credit unions are encouraged to read the discussion paper and consider the areas where changes to the regulatory framework could support their future development.

Read the discussion paper: Credit Unions: Supporting sustainable growth and resilience – PRA and FCA.