Regulators propose changes to rules for credit unions in the UK

The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) set out ideas on 3 November 2026 for changing the rules that apply to credit unions. They are meant to help the sector grow, introduce new products and better meet its members' changing needs. The announcement was published by the Bank of England.

What credit unions are

Credit unions are owned by their members. They typically focus on savings and personal loans, and membership is usually based on a shared occupation, community or area. Together they have more than two million members in the UK.

The discussion paper

The proposals are set out in a discussion paper. It builds on the regulators' joint 2025 Mutuals Landscape report. It examines whether the current regulatory framework remains proportionate as the sector evolves, and how credit unions can widen access to financial services.

The options on which the regulators are seeking views include:

• removing some internal audit and regulatory documentation requirements for smaller credit unions, without compromising stability;
• a risk-based framework for larger, more complex credit unions, with more flexible capital requirements;
• applying rules for smaller deposit takers, including the standardised approach for risk-weighted assets, in place of the current simple leverage ratio;
• a simplified version of the Basel framework for large credit unions, with a simple capital buffer for periods of stress;
• an examination of barriers to offering new products and services, including the role of shared-service organisations and third parties;
• additional FCA guidance on working with third parties to provide important services;
• whether changes to FCA fees could reduce regulatory costs;
• a path for credit unions to convert into building societies;
• a review of the framework for solvent exit, to allow business to be transferred or restructured in an orderly way.

Comments from the regulators

Shoib Khan of the PRA said credit unions are an important part of the financial services sector and that their regime can be made even more proportionate and growth-friendly. Sheree Howard of the FCA noted that credit unions support millions of members, including people who might otherwise struggle to access affordable financial services.

The regulators are encouraging firms to give feedback on the options and to suggest others not included. At this stage, the possibilities give more choice to firms with very different business models, growth trajectories and risk profiles.

The paper is only a starting point for discussion, so it does not yet mean any change to the rules.