The Prudential Regulation Authority (PRA) has published a policy statement setting out its final policy on Credit Union Service Organisations (CUSOs), amending the Credit Unions Part of the PRA Rulebook and updating Supervisory Statement SS2/23 to permit and supervise credit union investments in, and use of, CUSOs. Reflecting feedback from 11 consultation responses, the final approach expands the definition of permissible CUSOs so that credit unions may invest in CUSOs that also serve other UK-regulated mutuals with a Part 4A permission, and clarifies that credit unions may partner with non-credit unions to own a CUSO. The PRA also increased the maximum investment limit (where funded from a credit union’s own capital) from 5% to 7.5% of capital, with clarifications on how the limit applies and circumstances in which exceptions may be considered. The updated SS2/23 sets safeguards and expectations including due diligence and risk analysis, governance and conflict-of-interest management, and legal and operational separation to manage prudential risks and limit a credit union’s liability to its investment. Separately, SS2/23 is amended to remove outdated references following the deletion of SS20/15, without changing existing credit union risk management expectations. The rule changes take effect from 20 February 2026, while the new CUSO chapter in SS2/23 takes effect on 20 August 2026, giving credit unions six months to implement the supervisory expectations.
Prudential Regulation Authority 2026-02-20
Prudential Regulation Authority finalises credit union CUSO investment rules and raises the cap to 7.5% of capital
The Prudential Regulation Authority has issued its final policy on Credit Union Service Organisations, amending the Credit Unions Part of the PRA Rulebook and Supervisory Statement SS2/23 to permit and supervise credit union investments in, and use of, CUSOs. The policy broadens permissible CUSOs, allows joint ownership with non-credit unions, and raises the maximum investment limit from 5% to 7.5% of capital, while setting expectations on due diligence, governance, conflict management, and legal and operational separation to manage prudential risks. SS2/23 is also updated to remove outdated references without altering existing risk management expectations.