Credit unions play a vital role in promoting financial inclusion and providing affordable financial services to communities across the country. However, the current common bond framework in Great Britain presents barriers to sustainable growth, expansion and merger activity in the sector. The Government are committed to addressing these barriers while preserving the community-focused ethos that makes credit unions distinctive.
In November 2025, as part of the financial inclusion strategy1, the Government confirmed their intention to bring forward a package of growth-focused reforms to the common bond in Great Britain. This followed a call for evidence on the common bond, launched by the Chancellor at Mansion House in 2024, as part of the Government’s commitment to double the size of the mutuals sector.
The Government are today announcing the following changes that seek to remove barriers to the growth of the credit union sector in Great Britain. When parliamentary time allows, the Government will legislate to:
Increase the potential membership cap on the locality bond from 3 million to 10 million. This will significantly expand the potential size of locality-based credit unions, which make up 79% of the sector, and reduce uncertainty regarding mergers;
Allow credit unions to permit students to join locality-based credit unions, in addition to those who reside or work in the geographical area;
Allow credit unions to admit members’ relatives into a credit union regardless of whether they live in the same household as the qualifying member, as well as individuals who live in the same household as the qualifying member. This will better reflect modern family dynamics and broaden the membership base; and
Allow credit unions to retain members of occupation and employer bonds as fully qualifying members upon retirement, including allowing retirees to join a credit union after retirement has begun. This will also apply to locality bonds where members are eligible based on employment within the locality.
These reforms will help credit unions grow sustainably so that more people across the UK can access affordable, community-based financial services.
This announcement complements broader work to support credit unions, including the Prudential Regulation Authority’s policy statement on credit union service organisations2, the £30 million credit union transformation fund for England announced as part of the financial inclusion strategy and led by Fair4AllFinance, and the FCA and PRA’s planned review of the regulatory framework for credit unions, as set out in the mutuals landscape report published on 5 December 2025.3
These reforms also form part of the Government’s work on our manifesto commitment to double the size of the co-operative and mutuals sector, in partnership with the sector.
The full call for evidence response describing these reforms in detail is published on gov.uk:
[HCWS1418]