Credit unions: Review of the capital regime

Consultation Paper 28/19
Published on 24 October 2019


In this consultation paper (CP), the Prudential Regulation Authority (PRA) sets out its proposed changes to the capital requirements that apply to credit unions. The proposals would result in amendments to the Credit Union Part of the PRA Rulebook (Appendix 1) and Supervisory Statement (SS) 2/16 ‘The prudential regulation of credit unions’ (Appendix 2).

The CP is relevant to all UK credit unions.

Summary of proposals

The key proposed changes are:

  • for credit unions with more than £10m of total assets, to provide a greater degree of flexibility and remove barriers to growth by replacing the current regime with a “graduated rate” approach and removing the 2% capital buffer; and
  • to reduce complexity in the capital regime by removing the association between credit union activities/membership size and capital requirements and to address the risks posed by these factors by other means.

The PRA also proposes changes to SS2/16 relating to smaller credit unions. The PRA has set new expectations in relation to credit unions with a capital to assets ratio in the 3-5% range, in which a credit union with a capital to assets ratio below 5% should be prepared to engage more fully with the PRA. 

Responses and next steps

This consultation closes on Friday 24 January 2020. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to


The PRA proposes that the proposed changes would take effect upon publication of the final policy.

PDFConsultation paper 28/19

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