Trust, tradition and the future of mutual growth

Introduction

As a history lover, it’s thrilling to be in a city like Edinburgh – called a ‘hot-bed of genius’ during the Scottish Enlightenment. 

What defined the Enlightenment spirit was the refusal to settle, and a determination to make things better for the future.

It’s the kind of approach I’m taking to this moment of regulatory reform.

Working with others to solve difficult problems, protecting trust and good outcomes, and modernising where we can – so the framework supports growth and innovation. 

Both now, and in the future.

Everyone in this room is well-placed to help shape what comes next. 

You’ve already laid a strong foundation, bringing diversity, competition and resilience to the financial sector.

And helping consumers build their financial confidence, buy their first homes and find community. 

Now is the time to build on that foundation and create the space to grow. 

Our strategy

The FCA’s areas of focus are clear.

Supporting growth and innovation. 

Helping consumers navigate their financial lives. 

Fighting crime. 

And working more smartly.

This means rebalancing risk – a theme at the heart of our five-year strategy.

We’re deliberately moving towards a less prescriptive, outcomes-focussed regulatory approach.

One that gives you the freedom to innovate while also delivering better for your customers.

We’ve heard your feedback, and know sometimes firms can need more help in this.

So we’ve strengthened our support, including through:

• good and poor practice guides to the Consumer Duty;
• additional tailored information for smaller firms; and 
• a new Mutuals Society Development Unit, launched with the PRA. 

Mutuals already hint at what smarter risk management can look like: high standards, whole-person judgement, and balanced calls rather than box-ticking.

Use that springboard.

If our rules, framework or ways of operating get in the way, tell us. 

Engage with us – our teams are here to help. 

We understand your sector, and are now able to draw directly on the expertise of leaders with first-hand experience.  

Amanda Shepherd, previously chief operating officer at Newcastle Building Society, will join us in May as senior advisor for mutuals. She’ll help support strong standards and long-term growth across the sector.

We know that the confidence to innovate depends on both flexibility and predictability. 

That means knowing that when things go wrong, there will be quick, predictable resolutions.

So, we are supportive of changes to modernise the redress system.

The Financial Ombudsman (FOS) is vital to system confidence, and must be able to do its job well. 

For firms, that means clarity on how complaints will be handled. 

And for consumers, somewhere independent and impartial to turn if they can’t resolve things directly with the firm. 

Alongside the FOS, we have published further proposals to improve redress in practice and ensure it works for everyone. 

More consistency for firms. Faster, smoother compensation for consumers. 

Of course, it’s preferable for firms to spot and address harm sooner – and resolve problems before they reach the Ombudsman. 

We monitor complaints, particularly those for vulnerable consumers. And expect firms to do the same so they can identify root causes and take action.

But we’re making changes early to improve the system, where we can now, to support better outcomes. 

Helping consumers

This is more important than ever as consumers face pressures driven by events in the Middle East and beyond.

We are watching for signs of increased consumer vulnerability.

We already require firms to act early and pro-actively for consumers who are in, or at risk of, financial difficulty. 

With clear communications and support when things are going wrong. 

And a requirement for lenders to signpost free, impartial debt advice before taking further steps to collect debt.

We’re seeing positive changes in this space and a renewed focus since the Consumer Duty.

But we also know that consumers can be fearful to say if they are in difficulty: Nearly half of adults who have experienced problem debt told no one. 

Banks, building societies and lenders can help – consumers just have to speak with them.

As mutuals, I know you know this. Supporting your members and local communities is at the heart of what you do, especially in times of uncertainty.

Mortgages

That support will matter even more this year, as nearly 2 million fixed-rate mortgage deals come to an end. 

This is a real moment of change for many. It’s right we pay attention. 

But the big picture is more encouraging than headlines suggest – and fundamentally different from 2022 and 2023.

This time, rate rises are less dramatic. 

Most borrowers aren’t facing a sudden jump from ultra-low rates to much higher ones, and many have had time to adjust. 

Mortgage customers will also have been stress-tested at rates above the prevailing ones today.

Accounts in arrears peaked in Q2 2024, at levels below their long-term average – and have since fallen. 

Similarly, the proportion of regulated accounts in arrears of over 1.5% of the mortgage balance peaked in Q3 2024 and is now falling, too.

And, despite a challenging outlook, the Financial Policy Committee has found that UK households have the resilience to cope. 

But we can’t be complacent. 

We will continue to monitor the data closely and regularly.

In June, we’ll consult on revised responsible lending standards to support more first-time buyers and underserved consumers, including those with variable or irregular incomes.

But conventional mortgages are only part of the puzzle. 

In the coming years, more consumers are likely to need to draw on housing wealth in retirement.

While many building societies already offer retirement interest-only and lifetime mortgages, they’re still niche. 

So we’re looking at whether the markets should change as consumer needs evolve, and welcome your insights. 

And we’re not just listening - we’re acting. 

Together with the PRA, we’ve already given lenders more scope to use the 15% loan-to-income (LTI) flow limit – and have seen an increase in higher LTI lending.

Our clarification on stress testing has resulted in 85% of the market changing tack and the highest level of first-time buyers in years. 

And in February, we concluded a TechSprint on using open finance data to improve outcomes for customers remortgaging or making overpayments.

All changes aimed at boosting growth, enabling innovation to support consumers, and making our regulation smarter.  

Beyond mortgages

Your members’ needs don’t stop at mortgages, and many of you are already thinking about what comes next for them.

Because nobody knows them better than you do.

Which is why we are working on ways to help consumers take informed risks and invest with confidence.  

Some mutuals are already making support and advice more accessible, framing it as part of their wider duty to support members. 

That’s great to see, and I encourage others to follow suit.

I’m often asked if now – amid volatile markets and cost of living pressures – is the time to focus on reforms to support a greater culture of retail investment. 

And I say yes. The risk of not doing so is significant.

While investing won’t be right for everyone, people in the UK invest far less than those in the EU or US – and ultimately miss out on the potential benefits. 

We know this is in part because they feel unsupported in the decision-making process.

Our once-in-a-generation reforms to the advice market will change that.

And give consumers access to the help and guidance they need, at a cost they can afford, so they can make informed decisions about their financial lives. 

Targeted Support is now live, with some firms approved on the first working day of the new regime - a sign of our intent to move forward with these reforms as quickly as we can.

And we are consulting on improvements to the simplified advice regime, so consumers can access different types of support when making investment decisions.

Helping consumers navigate their financial lives with confidence is as important now as it has ever been.

But it takes more than rules to build a market that works for everyone.

It also calls for innovation.

What next

Mutuals are often among the first to innovate.  

Being so close to the communities you serve means you spot where things could be improved sooner – and find new ways to do it. 

Leading to better financial resilience, greater trust, and more inclusion. 

Credit unions are a great example.  

They play a vital role in the UK’s financial ecosystem and underserved communities. 

So we want to help them stay diverse, competitive and future-ready.

Alongside the PRA, we are reducing unnecessary barriers so credit unions can better serve the next generation of members.

And the Government’s Financial Inclusion Strategy includes important steps to widen access to credit and help identify mutual sector solutions, to mutual sector problems. 

Like the new Credit Union Transformation Fund – led by Fair4All Finance – which aims to help credit unions scale sustainably and double membership by 2035. 

We look forward to the findings from the recent consultation on its design and delivery. 

Creative collaboration – like the Small Sum Lending pilot – will also be key to solving the challenge on access to credit.

And now is the time to find new ways to make systems better. 

We want to be a partner in that work. 

Our innovation services and Regulatory Sandbox give you the opportunity to test new products. 

And we are there to support you through our TechSprints, Mutual Societies Development Unit, and Scale-Up Unit. 

Because innovation isn’t separate from regulation. 

It’s how we keep the framework fit for the future, without losing sight of outcomes and trust.

Conclusion

Tomorrow night, in the National Museum of Scotland, you’ll be surrounded by things that lasted because people refused to stop improving.

Let that same spirit live on in the mutual sector. 

We’ll be there as you go, with a framework that supports you. One that’s focused on outcomes and ready for the future. 

So you can continue to shape what comes next with confidence.