The Building Societies Association (BSA) welcomes the publication of the regulators’ Mutuals Landscape Report.¹ The report recognises that mutuals increase UK corporate diversity which leads to greater resilience in the financial system. The refreshed focus by the regulators will support the government’s aim to double the size of the mutual sector and highlights the importance of having regulations that are appropriately proportionate to the risks mutuals pose.

For too long, the regulators have adopted a one-size-fits-all approach, with rules designed for large, diversified banks being applied to building societies without adjustments, despite their lower risk profile.

The new ‘Strong and Simple’ framework goes some way to address this imbalance for smaller societies, and we welcome today’s parallel announcement confirming that the Building Societies Sourcebook will be retired with immediate effect. The Sourcebook was excessively restrictive and anti-competitive towards the building society sector. Its removal allows societies to compete on a level playing field with banks, while staying focused on their principal purpose of using members’ savings balances to fund home ownership.

We are pleased that the PRA and FCA are providing feedback to the FRC on the costs and lack of availability of PIE auditors and how this acts as a barrier to growth. Building societies and credit unions are not driven by short-term shareholder profits, which means they can take a long-term, and more balanced approach to risk. Research shows that a diverse mix of financial business models promotes financial stability and resilience to financial shocks.²  The BSA now calls on regulators to publish metrics monitoring business model diversity, demonstrating how it is considered in policy development, supervisory actions and how the Bank of England’s Financial Policy Committee (FPC) factors this into its assessment of financial stability of the UK.

We also welcome the regulators’ greater focus on credit unions, including a commitment to undertake a comprehensive review of the regulatory framework. We agree that further legislative changes may be required to support growing the sector such as common bond reforms, so that regulations and legislation facilitate, rather than hinder, mutual growth.

Consumer benefits

Mutuals deliver tangible benefits to consumers by helping to keep interest rates competitive and offering better value for savers, borrowers and first-time buyers. Without them mortgage rates would likely be higher and saving rates lower. BSA data shows that last year building society members received an extra £4 billion³ in additional benefits, compared to the rates and benefits offered by banks.

Ruth Doubleday, Head of Prudential Regulation at the Building Societies Association said:

“The publication of the Mutuals Landscape Report and the retirement of the Building Societies Sourcebook mark the beginning of a new era of more proportionate regulation, whether relating to a firm’s size or business model type.

“Mutuals are vital for a competitive financial services market, offering better rates for savers and borrowers and providing a stable, long-term approach that benefits the wider economy. This report is a great reminder that when regulation recognises different business models, consumers, communities and the financial system all benefit.”

[ENDS]

References

1 Link to the Mutuals Landscape Report

2 “Harnessing the mutuals sector potential for growth”, WPI Economics, 2025 “The origin of financial instability and systemic risk: Do bank business models matter?”, Barbara Casu, Rym Ayadi, Paola Bongini, Doriana Cucinelli, Journal of Financial Stability, 2025

“Systemic risk in banking ecosystems”, Haldane, A and May, R, Nature, 2011

“Regulators should encourage more diversity in the financial system”, Wagner, W & Goodhart, C, CEPR, 2012

“Measuring corporate diversity in financial services: a diversity index” Michie, J & Oughton, C, International Review of Applied Economics, 2022

3 Source: building societies annual reports 2024/25

Notes to Editors:

The Building Societies Association (BSA) represents all 42 UK building societies, including both mutual-owned banks, as well as 7 of the largest credit unions. Building societies and mutual-owned banks have total assets of almost £677 billion and together with their subsidiaries, hold residential mortgages of £493.4 billion, 29% of the total outstanding in the UK. They also hold £495.6 billion of retail deposits, accounting for 23% of all such deposits in the UK. Building societies and mutual-owned banks account for 47% of all cash ISA balances.

With all of their headquarters outside London, building societies employ around 52,300 full and part-time staff. In addition to digital services, they operate through approximately 1,300 branches, holding a 35% share of branches across the UK.

Press contacts:

press.office@bsa.org.uk