On 2 December 2024, the Prudential Regulation Authority (PRA) published letters to the directors of credit unions, setting out key findings from its annual assessment for this peer group and the actions the PRA expects directors to take.

Two separate letters were published: one to directors of credit unions with total assets of up to £10 million, and the other to those with total assets between £10 million and £50 million.

The letters explain that a Periodic Summary Meeting was held recently for each of the peer groups, at which the PRA reviewed the risk profile of the group, examined and challenged the medium to long-term supervisory strategy and approved the supervisory plan for the following 12 months. The letters set out the key findings from the PRA’s annual assessment and the actions it expects firms to take.

For both groups, the PRA notes that it has identified two key risks that firms should address and that will drive its supervisory engagement with credit unions over the next 12 months:

• Operational resilience and disorderly failure – the PRA’s thematic work during 2025 will focus on operational resilience and minimising the risk of disorderly failure.
• Corporate governance – the PRA has been engaging with credit unions and plans to share the findings of its project, including minimum expectations for credit unions in each peer group, during 2025.

The PRA also notes that the letters should be read alongside the Dear CEO letter to UK deposit takers that outlines the PRA priorities for the sector, flagging that the 2025 letter will be published in January 2025. In the meantime, directors are reminded that they have personal and joint obligations to serve their members and to meet regulatory and legal requirements, and that in doing so they should consider the points set out in the letter and act appropriately.