The whole is greater than the sum of the parts – reflections on credit union regulation

12/11/2026

On 3 November, the PRA and FCA published their much-anticipated Discussion Paper on the future of credit union regulation both prudential and conduct.

The review was trailed back in December 2025 with the publication of the Mutuals Landscape Report with an event at the historic home of co-operation, Toad Lane in Rochdale.  It forms a key part of a package of measures to support credit union growth in line with the government’s twin policy objectives to double the scale and reach of co-operatives and mutuals and its Financial Inclusion Strategy.

Other key elements of the support the sector is currently enjoying include:

• expansion of the common bond, including taking the geographical potential membership limit to 10 million;
• the £30mn Credit Union Transformation Programme from Fair4All Finance which opens for applications imminently;
• PRA rules on credit unions investing in Credit Union Service Organisations, live for around a year;
• the National Coalition for Workplace Savings, and
• expansion of delivery partners for Help to Save to include credit unions.

We are living through an historic moment of opportunity for credit unions akin to the period under the last Labour government in the early years of this century when credit unions doubled their membership and trebled their financial size.  This is a moment we must seize if we are to fulfill our internationally proven potential.

But while the Discussion Paper is, of course, very welcome, it also poses some deep and unsettling philosophical questions about how we see the future of our movement which is increasingly diverse and broad in the range of size, complexity and risk profile among the roughly 350 credit unions operating across the UK.

The Paper asks searching questions on how the regulatory regime can best accommodate both the smallest credit unions as well as the largest and most complex.  This might involve simultaneously reducing requirements for the smallest while introducing increased sophistication of requirements and perhaps even facilitating the conversion of credit unions into building societies for the very largest.

Of course, there is much to debate in the detail of the many and various options and ideas put forward by the paper and we should approach it as it is intended – to prompt a discussion, rather than indicating a fixed point of view.   This is an opportunity to shape regulation in support of our growth ambitions.

However, as we enter into this crucial discussion, it is imperative that we take a moment to step back from our own credit union and our day-to-day challenges and think deeply about what we wish our proud movement to look like in the future.

As co-operative organisations, governed by the famous Rochdale principles, including, notably principle 6 – co-operation among co-operatives – we should think carefully before pursuing any course of action which entrenches or intensifies fragmentation and bifurcation between the big and the small.

In our more than 60-year history in the UK, we have gained so much more than we have lost by operating under a shared rulebook underpinned by a shared identity and we should strive, to the greatest possible extent, to maintain and nurture the overall integrity of the legislative and regulatory framework in which we operate.

While it is true to say that credit unions operate at a range of scales and levels of complexity, we are also drawn from a common culture and ethos with common values and motivations.  We must ensure that all credit unions have the same opportunity to scale and develop in their reach and impact and avoid inadvertently creating a two-speed regulatory system which encourages ever-greater gaps, cliff-edges and barriers within and between our movement.

Ultimately, as co-operative organisations the whole of our movement is greater than the sum of its parts and we must seek to pursue our ambition for growth as a common endeavour, available to all of us.  Having one coherent regulatory framework, proportionate for all, is a necessary condition to achieving that.