UK PRA final policy on reforms to credit union investment rules

The UK Prudential Regulation Authority (PRA) has published policy statement PS5/26, finalising amendments to its framework for credit unions wishing to invest in credit union service organisations (CUSOs). Following its June 2025 consultation, the PRA largely finalised its policy as consulted on, including: (i) amending the Credit Unions Part of the PRA Rulebook to clarify that credit unions may invest in CUSOs; (ii) updating Supervisory Statement (SS)2/23 to add a new chapter setting out expectations for credit unions that invest in or use CUSOs; and (iii) making consequential changes to chapter 17 of SS2/23 following the deletion of SS20/15.

The PRA has also made targeted changes in response to feedback including:

• Amending the credit union investment rules to provide that credit unions may invest in CUSOs that serve other UK-regulated mutuals (those with a Part 4A permission).
• Clarifying that a credit union may partner with non-credit unions to own a CUSO.
• Introducing safeguards to ensure the risks associated with the expansion of CUSO scope in this way are managed.
• Increasing the maximum investment that a credit union can make in a CUSO from 5% to 7.5% of its capital, together with clarifications on the practical application of the limit.

The rule changes took effect on 20 February, with the new supervisory expectations in the new chapter of SS2/23 applying from 20 August, allowing a six‑month implementation period.

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