On 3 April 2025, the Prudential Regulation Authority (PRA) published a letter to directors setting out its approach to Credit Union Service Organisations (CUSOs) and intention to consult on rule changes.

The letter from the PRA’s Director for UK Deposit Takers, Laura Wallis, clarifies the current regulatory position with respect to credit unions that hold an investment in, or are users of, CUSOs. She notes that a small number of CUSOs (i.e. entities owned by credit unions that provide shared services to them, to benefit from economies of scale) are already established in the UK and there is increasing interest in establishing them, but there is some uncertainty as to whether the regulatory framework permits credit unions to hold an investment in CUSOs. To clarify this, the letter includes information on:

• Typical characteristics of a CUSO.
• Benefits and risks of CUSOs.
• Compatibility with legislation and the regulatory framework.
• The PRA’s approach to CUSOs.
• Some key regulatory considerations that the PRA has seen in other jurisdictions.

Next steps

Ms Wallis confirms that the PRA intends to consult later this year on changes to the PRA rules to remove any uncertainty on the regulatory position. The consultation will be based on the regulatory considerations outlined in the letter.

The PRA also plans to contact credit unions that are already investing in a CUSO to ensure that they are doing so in a way that is compatible with current regulation, and where appropriate it may use temporary rule modifications to ensure these credit unions’ use of CUSOs is in line with PRA rules.