Building society growth is on the agenda of the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) with a new report into the mutuals sector.
The Mutuals Landscape Report, published today, reinforces the regulators’ belief that mutuals are regulated according to the risks they pose.
As such, the PRA has today cancelled the Building Societies Sourcebook, or SS20/15.
The report said that “the expectations set out in SS20/15 are no longer consistent with the PRA’s broader policy approach and imposed prescriptive expectations on building societies that banks are not subject to”.
It added that scrapping the sourcebook will “help building societies to compete and grow in the UK market and reduce compliance costs on the societies”.
The Building Societies Association (BSA) welcomed the report.
A BSA spokesperson said: “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.”
The time for a new building society to apply will also be cut from 15 to 10 days.
The FCA will set up a Mutual Societies Development Unit, which will give mutuals help with legislation and policy, as well as help mutuals collaborate to build their businesses.
FCA chief executive Nikhil Rathi said: “The mutuals sector is remarkably diverse and rooted in the communities and members it serves. They support people buy a home, insure against the worst events, increase financial inclusion and bring communities together, whether in the club, pub or on an allotment. We want to help them grow, and our new Development Unit will provide dedicated support. We’re also making it faster for mutuals to start up.”
Building societies increased mortgage balances by £7.5 billion to £493 billion over the six months to September 2025, according to BSA figures.
