PRA – Standards in Governance Letter – CU’s <£50m in Assets
Friday 29 August 2025
Background
In March 2024, the PRA requested Category 4 Credit Unions (those with total assets below £50 million) to assess their governance arrangements.
Credit Unions were asked to attest to compliance with regulatory rules and guidance or submit action plans to achieve compliance.
The PRA issued a letter on the 28 August 2025 to provide an update to those credit unions on the areas the PRA sees as requiring continual focus and to encourage boards to assess themselves against the areas specified below. This letter linked at the bottom of the briefing.
Overall Assessment
- Positive Engagement: High levels of engagement and action were noted across the sector.
- Compliance: Many credit unions attested to compliance or submitted credible work plans.
- Areas for Improvement: Despite progress, several areas require continued attention to align with best practices.
Key Areas for Continued Focus
- Succession Planning & Resourcing
- Ensure plans are in place to replace departing staff and directors with qualified individuals.
- Maintain contingency plans for unexpected departures.
- Policy Documentation & Management Information
- Regularly review and update key policies (e.g., Lending Policy, Liquidity Monitoring Policy).
- Ensure management information supports effective governance and decision-making.
- Business Planning
- Keep business plans current with:
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- Clear objectives
- Annual targets
- Financial forecasts
- Risk assessments
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- Keep business plans current with:
- Performance Assessment
- Implement formal and timely appraisals for board and senior management against agreed objectives.
Regulatory Expectations
- Boards must ensure governance and risk management standards meet PRA rules and guidance.
- A minority of firms showed insufficient progress; targeted engagement will continue.
Next Steps
- Boards should:
- Review this letter at an upcoming board meeting.
- Reassess governance arrangements in light of the feedback.
- The PRA will continue monitoring through firm meetings and industry engagement.
If any of our members would like to discuss how ABCUL can support your credit union with any of the above, please do not hesitate to reach out to your Member Relationship Manager or any of the ABCUL team. We have a library of policy templates, example business plans and other resources available on the ABCUL website.