Mutuals landscape report

Key Take Aways

• The mutuals sector plays a critical role in the UK financial services ecosystem, serving over 30 million members with mortgages, loans, and insurance products.
• Mutuals contribute to financial diversity, resilience, consumer trust, and financial inclusion, particularly in underserved markets and communities.
• The regulators emphasise a tailored, proportionate regulatory framework that recognises the distinct ownership and governance models of mutuals.
• Significant regulatory reforms have been implemented, including the Strong and Simple regime for small deposit takers and Solvency UK for mutual insurers, reducing burdens for smaller firms.
• The sector has experienced consolidated growth, with several large mutuals dominating their markets but still a significant number of smaller, community-based mutuals.
• Building societies hold approximately £661 billion in assets, with 42 remaining in the UK, and predominantly serve niche mortgage markets like self-build and shared ownership.
• Credit unions in the UK serve around 2 million members with over £4.9 billion in assets, with growth driven by legislative reforms and an evolving capacity to serve larger, more complex entities.
• Mutual insurers manage over £23 billion in premiums, with a declining number of firms but high capital buffers, indicating a focus on financial stability.
• Challenges faced by mutuals include raising capital due to mutual ownership restrictions, economies of scale, regulatory burdens, and operational costs, especially in digital infrastructure.
• Regulatory initiatives support mutual sector growth, including shared services, collaborations, and bespoke regimes, fostering economies of scale and commercial resilience.
• There is a recognised need for legislative updates to modernise frameworks, improve exit mechanisms, and support sector growth.
• Continuous sector engagement and collaboration are crucial, with a focus on fostering innovation, reducing regulatory complexity, and enabling strategic mergers.

Key Statistics

• Over 30 million members are served by the mutuals sector.
• Building societies possess approximately £661 billion in total assets as of Q1 2025.
• The largest six building societies hold around 90% of the sector’s assets.
• Building societies account for 31% of UK mortgage lending and 23% of retail savings.
• Credit unions serve over 2 million adults with assets just over £4.9 billion.
• There are around 350 active credit unions across the UK.
• The mutual insurance sector holds over £23 billion in premiums, with 100 mutual insurers in 2024, down from 154 in 2016.
• Three largest insurance mutuals hold 84% of sector assets; 90 mutual insurers collectively hold only about 16%.
• Approximately 240 credit unions hold less than £10 million in assets.
• Capital levels in mutuals, including building societies and insurers, are often well above regulatory minimums.
• The number of mutual insurers has decreased significantly, with many in run-off.
• Legislation updates have increased the small business deposit exclusion threshold from £1 million to £6.5 million.

Key Discussion Points

• The importance of mutuals in diversifying the UK financial market and supporting local communities.
• The sector’s ongoing evolution driven by consolidation, legislative adjustments, and technological change.
• The benefits of proportionate regulation and tailored support initiatives for mutuals’ growth and resilience.
• The rationale behind regulatory reforms such as Strong and Simple and Solvency UK, developed to support smaller firms.
• Challenges in raising capital due to mutual ownership and the potential for legislative changes to develop new capital instruments.
• The impact of consolidation and mergers on mutuals’ economies of scale and service delivery.
• The evolving legislative landscape, including recent reforms and future considerations for modernisation.
• The sector’s capacity for collaboration via shared services, mutual joint ventures, and sector-wide networks.
• The regulator’s commitment to maintaining ongoing engagement, communication, and sector support.
• The strategic importance of the sector’s long-term vision in fostering sustainable growth.
• Challenges faced by smaller mutual firms, including governance, resource constraints, and operational costs.
• The role of legislative and regulatory updates in facilitating exit strategies, stabilising the sector, and simplifying compliance burdens.

Document Description

This article is a comprehensive landscape report from UK regulators, the Bank of England, PRA, and FCA, published in December 2025, focusing on the evolving mutuals sector within financial services. It provides an in-depth analysis of mutuals’ contributions, structural dynamics, regulatory environment, and legislative framework. The report highlights recent reforms, sector challenges, growth opportunities, and ongoing engagement initiatives aimed at supporting the long-term sustainability and competitiveness of mutuals in the UK. Designed for senior managers and industry stakeholders, it underscores the importance of proportionate regulation, sector collaboration, and modernisation to foster resilience and innovation across the mutuals landscape.