Association of Financial Mutuals urges growth reforms

The Association of Financial Mutuals has launched a growth strategy urging the Government and regulators to remove barriers facing financial mutuals. The trade body says the plan is designed to help double the size of the mutual and co-operative sector.

The strategy argues that mutuals could play a bigger role in addressing gaps in protection, healthcare and savings across the UK, particularly for people less well served by mainstream providers. It says member-owned firms are well placed to support households facing financial shocks, ease pressure on public services and encourage investment beyond London and the South East.

At the heart of the document is a warning that existing rules are limiting the sector's contribution to the wider economy. The Association of Financial Mutuals wants ministers and regulators to introduce changes that would allow mutuals to expand their reach and increase the support they provide to customers and communities.

The trade body represents mutual and not-for-profit insurers, friendly societies and other financial mutuals. These organisations are owned by customers or members rather than shareholders, which the sector says gives them a different operating model from listed financial services groups.

Three gaps

The strategy identifies three resilience gaps in the UK economy. The first is a protection gap: many people would struggle if illness, injury or job loss caused a sudden drop in income.

The second is a healthcare gap, with poor health keeping millions of people out of work and adding pressure on households, employers and the NHS. The third is a savings gap, where some households have little or no savings, while others keep most of their money in cash rather than longer-term products.

According to the Association of Financial Mutuals, these issues affect both individual financial security and the wider economy. The group argues that mutuals can help address them because they often serve communities and customer groups that larger providers may not prioritise.

Andrew Whyte set out the case for policy change alongside the launch of the strategy. "Financial mutuals have a proven track record of supporting people through uncertainty and helping communities throughout the country build long-term resilience. At a time when many households are facing growing financial pressures, our sector is uniquely placed to bridge critical gaps in protection, healthcare and savings. This strategy sets out a clear and practical path for how Government and regulators can unlock the full potential of mutuals, not only to improve financial outcomes for individuals, but also to strengthen the UK economy beyond financial hubs such as London and the southeast. By enabling mutual firms to help close the gaps, the Government will also make progress towards achieving its 2024 Manifesto commitment to double the size of the mutual and co-operative sector. With the right support and reforms, mutuals can play a pivotal role in delivering a more inclusive, sustainable financial system that works for everyone," said Andrew Whyte, Chief Executive Officer, Association of Financial Mutuals.

Policy changes

The proposals include frameworks for auto-enrolment into long-term savings, investment and protection products. The strategy also calls for barriers discouraging take-up of health cash plans to be removed.

It also calls for reform of rules that restrict mutuals' ability to raise external capital. Access to capital has long been a point of debate in the sector, where firms seek growth while retaining member ownership structures.

The trade body wants wider access to targeted financial support and simplified advice, arguing that this would help more consumers make use of suitable savings and protection products.

Audit regulation is another area highlighted in the strategy. The Association of Financial Mutuals is calling for changes to the Public Interest Entity regime, arguing that the current approach creates disproportionate audit costs for smaller mutuals.

The document also urges ministers to implement recommendations from the Law Commission's review of friendly society legislation. That review examined the legal framework governing friendly societies, which have historically provided savings, insurance and healthcare-related products.

Growth agenda

The strategy links these reforms to the Government's stated ambition to expand the mutual and co-operative sector. The Association of Financial Mutuals says that ambition could support the development of a broader financial system if regulatory and legislative obstacles are removed.

It also points to the sector's current footprint, noting that member organisations already manage millions of savings, pensions, protection and healthcare policies across the UK and Ireland. On that basis, the trade body argues that mutuals already play a significant role in household finances and could do more if policy conditions change.

The launch adds to a wider debate about how to improve household financial resilience at a time of pressure on living standards, public services and long-term saving. The Association of Financial Mutuals says the Government has taken some steps to engage with the sector and understand barriers to growth, but it is now calling for practical reforms to follow.