The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have just announced they’re scrapping the Building Societies Sourcebook — the cornerstone rulebook that governed mutual lending practices.
They call it a “growth boost.”
I call it a warning sign.
The Disguise of “Empowerment”
In a move hailed by City Minister Lucy Rigby as part of the Treasury’s mission to “double the size of the mutuals sector,” the FCA and PRA have effectively thrown prudence to the wind. By ripping up long-standing lending restrictions, they’re paving the way for another credit binge — only this time, under the comforting banner of mutuality.
Make no mistake: this is deregulation in disguise — the same ideology that triggered the 2008 collapse. Back then, it was “light-touch regulation.” Now it’s “growth through flexibility.” The language changes, but the outcome is the same: loosen the rules, inflate the balance sheets, and when it bursts, taxpayers carry the cost.
From Protector to Partner
The FCA was created to protect consumers, not to enable institutional expansion. Yet today, it acts less like a watchdog and more like a growth partner to the Treasury.
By aligning itself with political agendas — “boosting growth,” “speeding up approvals,” “cutting red tape” — the regulator has surrendered its independence. The very body meant to prevent reckless lending is now cheerleading it.
That’s what regulatory capture looks like.
And it’s not confined to the banks. The building societies — once safe havens for savers and homebuyers — are being coaxed into the same treadmill of leveraged growth and profit chasing.
The Human Cost of “Competition”
The Sourcebook once imposed limits on risky, long-term fixed-rate lending — a safeguard against sudden interest rate shocks. Removing it under the guise of “competition” will allow mutuals to take on riskier positions.
When rates rise or markets turn, it won’t be the executives who suffer — it’ll be ordinary members. The same “members” mutuals claim to serve.
If this feels familiar, it should. Each deregulation cycle starts with promises of inclusion, innovation, and prosperity — and ends with consolidation, insolvency, and crisis.
What Citizens Need to Know
While the City applauds the “10-day fast-track approval” for new building societies, citizens should read between the lines:
- Faster approvals mean weaker due diligence.
- Fewer rules mean more risk buried in fine print.
- “Doubling the sector” means doubling exposure — not protection.
The last time regulators dismantled lending safeguards in the name of “growth,” it led to Northern Rock and a global crash. Now, the same story is being rewritten — this time, with mutuals as the lead actors.
Rebuilding Trust the Right Way
True reform doesn’t come from deregulation. It comes from transparency, accountability, and empowerment. Building societies could indeed play a vital role — if they returned to their roots: community lending, fair savings, mutual accountability.
But that requires integrity, not incentives.
It demands independence, not obedience to political targets.
The FCA’s latest move proves once again: captured watchdogs don’t guard the public — they guard the gatekeepers.
Watch out, citizens.
The next crisis always begins with the words “This time it’s different.”
Steve Conley
Founder, Academy of Life Planning
Championing structural trustworthiness in financial planning
Academy of Life Planning 