UK regulators to review how regulation affects mutual sector

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have been given until the end of 2025 to review how regulation could be reformed to boost the UK’s mutual sector.

Rachel Reeves, Chancellor of the Exchequer, revealed in her Mansion House speech on November 14 that she had written to both regulators with instructions to report on the current mutuals landscape.

In the letters to Nikhil Rathi, chief executive of the FCA, and Sam Woods, chief executive of the PRA, she said: “I am writing to you regarding the government’s commitment to unlock the full potential of the mutual and cooperative sector in the UK, and the importance of effective and proportional regulation in supporting this. As you will know, this is something I care about deeply, and raised accordingly in my introductory meetings with both the FCA and the PRA.”

More than 30 million individuals have a financial relationship with a UK mutual. Building societies hold 19% of all UK cash savings on behalf of their customers, and some 40% of all cash ISAs. Together, building societies and mutual insurers employ 76,000 people.

A record 43 Labour and Co-operative MPs were elected to Parliament in July, and Labour’s manifesto included a commitment to double the size of the UK’s mutual and co-operative sector.

Warm welcome

“I am delighted the chancellor has used her first Mansion House speech to demonstrate the government’s commitment to double the size of the mutual economy by announcing a package of measures to support the growth of the sector. A strong mutual sector provides choice for consumers and creates resilience for the financial sector,” said Robin Fieth, chief executive of the Building Societies Association.

Mutuals have long complained that regulation is not designed with the specifics of their sector in mind.

“We want a level playing field so we can compete fairly with others in the financial sector and meet the needs of our communities. We want a minister for mutuals, and to be at the heart of the government’s thinking,” said Tom Simpson, interim chief commercial officer at Yorkshire Building Society.

Mutuals council

As well as the letters to the PRA and FCA, Reeves welcomed the establishment of the Mutuals and Co-operative Council, which counts Nationwide, the UK’s largest building society, and Royal London among its members.

“Royal London is delighted to be a founding member of the industry-led Mutuals and Co-operative Council, and we strongly welcome the chancellor’s formal endorsement of its creation. As the UK’s largest mutual life, pensions and investment company, we look forward to working with the government to help deliver its ambition to double the size of the sector and strengthen the mutual choice for UK consumers,” said Jamie Jenkins, director of policy at Royal London.