In a significant move for the UK's member-owned economy, financial regulators have unveiled a package of measures designed to strengthen and grow the mutuals and co-operatives sector. This follows the Labour government's manifesto commitment to double the size of the £223 billion industry.
Rochdale Announcement and Regulatory Overhaul
The plans were set out in Rochdale, the historic birthplace of the co-operative movement, on Friday. City Minister Lucy Rigby was joined by senior officials from the Financial Conduct Authority (FCA) and the Bank of England to detail the initiative.
The changes stem from a year-long review launched after the 2024 election. The review identified that many mutuals have faced challenges in scaling up, investing in new technology, and competing with larger private companies.
The core proposals include streamlining regulation and simplifying application processes for new mutuals. A key new feature is the launch of a mutual societies development unit, which will provide dedicated expert advice and support to organisations across the sector.
Supporting Growth and Potential Mergers
FCA Chief Executive Nikhil Rathi stated that the overhaul aims to foster "long-term, sustainable growth" and ensure a competitive landscape. He highlighted that mutuals play a crucial role in financial inclusion and serving underserved communities.
One of the most impactful changes is expected to be the simplification of the application process. Currently, groups must incur significant cost and time obtaining solicitor declarations before they can form. The new system will offer personalised pre-application support.
Regulators also plan to open discussions with mutual building societies about preparing for potential mergers and acquisitions (M&A), which are becoming more common. Recent examples include Nationwide's acquisition of Virgin Money and Coventry Building Society's purchase of the Co-operative Bank.
In a speech, the Bank of England's Laura Wallis noted that mergers can be a tool for mutuals to gain scale. She stated that while regulators are "agnostic on sector structure," they stand ready to support mutuals pursuing such deals.
The Scale and Importance of the Sector
The mutuals sector is a substantial part of the UK economy. There are over 8,400 co-operative and community benefit societies, encompassing housing associations, social clubs, and retail groups.
This is in addition to financial mutuals like building societies, insurers, and credit unions. These financial mutuals collectively serve around 30 million members and hold assets exceeding £223 billion.
The announcement coincides with a separate consultation by the Department for Business and Trade aimed at supporting non-financial mutuals and businesses looking to transition to co-operative ownership models.
