UK PRA issues 2025 sector assessment letter to credit union directors

The UK Prudential Regulation Authority (PRA) has published a letter addressed to credit union directors. It summarises key findings from its 2025 assessment of credit unions with assets up to GBP50 million and sets out supervisory priorities for 2026. The PRA identifies operational resilience as a key risk, with thematic work planned in 2026 to strengthen this area, including contingency planning and ensuring robust arrangements for replacing key staff and directors. The second key risk highlighted is disorderly failure: boards are expected to monitor prudential positions and financial forecasts proactively, act promptly on emerging issues and consider alternatives where activities become unsustainable, to avoid disorderly wind-down. In addition to these priorities, the PRA will maintain a focus on risk management throughout 2026. Governance standards also remain a priority, with emphasis on reducing dependency on key individuals and improving risk oversight. Areas for continued attention include succession planning, policy reviews, business planning and board performance appraisals (noted as a non-exhaustive list). The PRA reminds credit unions of their regulatory obligations, including maintaining open and cooperative engagement under Fundamental Rule 7. The letter should be read alongside the January Dear CEO letter to UK deposit takers, which outlines the PRA's priorities in this sector.

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