CP11/25 – Discontinuing SS20/15: Supervising building societies’ treasury and lending activities

Privacy statement

By responding to this consultation, you provide personal data to the Bank of England (the Bank, which includes the Prudential Regulation Authority (PRA)). This may include your name, contact details (including, if provided, details of the organisation you work for), and opinions or details offered in the response itself.

The response will be assessed to inform our work as a regulator and central bank, both in the public interest and in the exercise of our official authority. We may use your details to contact you to clarify any aspects of your response.

The consultation paper will explain if responses will be shared with other organisations (for example, the Financial Conduct Authority). If this is the case, the other organisation will also review the responses and may also contact you to clarify aspects of your response. We will retain all responses for the period that is relevant to supporting ongoing regulatory policy developments and reviews. However, all personal data will be redacted from the responses within five years of receipt. To find out more about how we deal with your personal data, your rights, or to get in touch please visit Privacy and the Bank of England.

Information provided in response to this consultation, including personal information, may be subject to publication or disclosure to other parties in accordance with access to information regimes including under the Freedom of Information Act 2000 or data protection legislation, or as otherwise required by law or in discharge of the Bank’s functions.

Please indicate if you regard all, or some of, the information you provide as confidential. If the Bank receives a request for disclosure of this information, we will take your indication(s) into account but cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system on emails will not, of itself, be regarded as binding on the Bank.

Responses are requested by Friday 8 August 2025.

Consent to publication

In the policy statement for this consultation, the PRA will publish an account, in general terms, of the representations made as part of this consultation and its response to them. In the policy statement, the PRA is also required to publish a list of respondents to its consultations, where respondents have consented to such publication.

When you respond to this consultation paper, please tell us in your response if you agree to the publication of your name, or the name of the organisation you are responding on behalf of, in the PRA’s feedback response to this consultation.

Please make it clear if you are responding as an individual or on behalf of an organisation.

Where your name comprises ‘personal data’ within the meaning of data protection law, please see the Bank’s Privacy Notice above, about how your personal data will be processed.

Please note that you do not have to give your consent to the publication of your name. If you do not give consent to your name being published in the PRA’s feedback response to this consultation, please make this clear with your response.

If you do not give consent, the PRA may still collect, record and store it in accordance with the information provided above.

You have the right to withdraw, amend or revoke your consent at any time. If you would like to do this, please contact the PRA using the contact details set out below.

Responses can be sent by email to: CP11_25@bankofengland.co.uk.

Alternatively, please address any comments or enquiries to:
Strong and Simple Hub, UK Deposit Takers
Prudential Regulation Authority
20 Moorgate
London
EC2R 6DA

1: Overview

1.1 This consultation paper (CP) sets out the Prudential Regulation Authority’s (PRA) proposals for the deletion of Supervisory Statement (SS) 20/15 - Supervising building societies' treasury and lending activities.^{footnote [1]}

1.2 SS20/15 was introduced in 2015 and sets out the PRA’s expectations in respect of building societies’ compliance with the requirements of the Building Societies Act 1986 (1986 Act), the Financial Services and Markets Act 2000 (FSMA), the PRA Rulebook and SS24/15.^{footnote [2]} SS20/15 applies to all building societies, and is cross referenced in SS2/23: Supervising Credit Unions. ^{footnote [3]}

1.3 The PRA has undertaken a review of SS20/15, engaging with the Building Societies Association (BSA) and UK Finance, and has considered feedback from these industry bodies as part of its review. The conclusion of the review is that PRA considers that:

• The expectations set out in SS20/15 are no longer consistent with the PRA’s broader policy approach.
• SS20/15 presents a potential level-playing field issue as it imposes prescriptive expectations on building societies that banks are not subject to.
• Risk management in the building societies sector (the sector) has become more sophisticated since SS20/15 was introduced, and the PRA has a number of requirements and tools against which it can supervise firms’ risk management.

1.4 On this basis, the PRA has decided to consult on a proposal to withdraw SS20/15. Withdrawing the SS does not require changes to the PRA rulebook.

1.5 The PRA considers this proposal will assist building societies to compete and grow in the UK market and will not impose costs on the sector. The PRA sets out its costs and benefits analysis in Chapter 2 of this CP.

1.6 SS2/23: Supervising Credit Unions (Chapter 17: Additional expectations for credit unions that provide mortgages) has a number of cross references to SS20/15. The intention is that, as a result of the proposed deletion of SS20/15, the cross references in SS2/23 are deleted next time the PRA updates SS2/23.

1.7 This CP is relevant to building societies. Whilst none of the proposals in this CP are relevant to banks, they may be interested in the withdrawal of SS20/15.

1.8 The PRA has a statutory duty to consult when introducing new rules/changing rules (FSMA s138J), or new standards instruments (FSMA s138S). When not making rules, the PRA has a public law duty to consult widely where it would be fair to do so. 

• 1. None of the statutory panels were consulted about the proposals in this CP.

1.10 In carrying out its policymaking functions, the PRA is required to comply with several legal obligations. The analysis in this CP explains how the proposals have had regard to the most significant matters, including an explanation of the ways in which having regard to these matters has affected the proposals.

Implementation

1.11 The PRA proposes that the implementation date for the changes resulting from this CP would be 1 January 2026.

Responses and next steps

1.12 This consultation closes on Friday 8 August 2025. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to CP11_25@bankofengland.co.uk.

1.13 When providing your response, please tell us whether or not you consent to the PRA publishing your name, and/or the name of your organisation, as a respondent to this CP.

1.14 Please also indicate in your response if you believe any of the proposals in this consultation paper are likely to impact persons who share protected characteristics under the Equality Act 2010, and if so, please explain which groups and what the impact on such groups might be.

2: The PRA’s proposal

2.1 The PRA proposes deleting SS20/15 in its entirety. As noted in paragraph 1.2, SS20/15 was introduced in 2015 and set out the PRA’s approach to its supervision of building societies’ lending and treasury activities, building on the principle that the risk appetite of these firms should be aligned to their capacity to manage risk. The SS was intended to highlight key risks faced by societies at the time rather than to provide exhaustive coverage of all topics that boards should monitor. The SS sets out:

• descriptions of key lending and treasury risks to which societies are exposed;
• a framework of risk management approaches with four approaches for treasury risk (‘Administered’, ‘Matched’, ‘Extended’, Comprehensive’) and three approaches for lending (‘Traditional’, ‘Limited’, ‘Mitigated’); and
• indicative limits on societies’ activities that vary according to their treasury and lending approaches.

2.2 At the time of its publication in 2015, the document provided a useful set of guidance and placed limits on building societies that did not adequately manage their risks. However, the PRA considers that the sector has since developed and now has a more sophisticated approach to risk management.^{footnote [4]} Given the changes in the sector, the PRA’s current approach to regulatory guidance, and its new secondary competitiveness and growth objective, the PRA now considers it would be appropriate and proportionate to withdraw SS20/15.

2.3 The PRA has considered whether to update SS20/15 to introduce new guidance and expectations. However, it considers that it would be disproportionate to impose expectations on building societies (which are already limited by legislative restrictions in the 1986 Act, and whose business models the PRA considers to be stable) without equivalent expectations on banks. The PRA considers doing so would foster an unlevel playing field between these two sectors, and that withdrawing SS20/15 would boost the ability of building societies to compete.

2.4 While the PRA may consider developing further risk management expectations for all PRA-regulated firms in the future, it considers that there are sufficient regulatory requirements and tools in place to supervise building societies' risk management strategies following the withdrawal of SS20/15. For instance:

• It remains the responsibility of the board to oversee the development and maintenance of robust risk management processes proportionate to the nature and scale of a society’s business model and which meet the requirements set out in the Risk Control Part of the PRA rulebook.
• The PRA considers that the Senior Managers and Certification Regime (SMCR) has had a positive impact on the sector’s approach to risk management since its introduction in 2015, delivering a clearer allocation of prescribed responsibilities for the management of risks.^{footnote [5]}
• The PRA will continue to engage in routine supervision of building societies, utilising the PRA risk model to assess, for instance, risk management and board effectiveness, and societies’ internal capital and liquidity adequacy assessment processes (ICAAPs & ILAAPs). The resilience and vulnerabilities of societies will continue to be assessed under a range of scenarios and via periodic thematic and firm-specific asset quality reviews. Where PRA supervisors judge a firm’s risk management or governance to be below expectations, the PRA may decide to apply appropriate supervisory tools.

Risk management approaches and indicative thresholds

2.5 The PRA has reviewed the various risk management approaches set out in SS20/15. The purpose of these approaches was to describe different potential business models, and to help societies understand and meet the requirements set out in PRA rules. However, the PRA understands that the guidance and limits within SS20/15 have often been interpreted by firms as requirements. The PRA considers that it is for each society to determine its own financial risk management framework, based on board approved risk appetite, policies, risk management, systems capabilities, and management expertise.

2.6 The PRA considers that removal of existing guidance would allow societies to develop financial risk management frameworks tailored to their business model, thereby advancing the PRA’s primary objective of safety and soundness. For example, the PRA considers that management of interest rate risk is most effective when it includes the use of derivatives including interest rate swaps. It considers that there is minimal risk in removing SS20/15 limits on the use of derivatives given that the 1986 Act permits such use only for the purpose of limiting exposure to market risks including interest rate risk.

PRA objectives analysis

2.7 The PRA’s concern when considering the withdrawal of SS20/15 is the impact doing so might have on its objective of safety and soundness. As noted in 2.4 above, the PRA has adequate supervisory requirements and tools to ensure firms’ safety and soundness.

2.8 The PRA also considers that withdrawing SS20/15 could advance its secondary competitiveness and growth objective as societies may be encouraged to grow by adapting their risk strategies to better respond to changing market conditions.

2.9 Additionally the PRA considers that the proposed withdrawal advances its secondary competition objective. As noted in 2.3, similar expectations do not exist for banks, therefore withdrawing these expectations would boost the ability of societies to compete in the UK banking sector.

Cost benefit analysis (CBA)

2.10 The PRA considers that withdrawing SS20/15 would provide clear business and economic benefits by allowing greater flexibility for treasury assets and funding, therefore facilitating more efficient management of the treasury portfolio. By deleting SS20/15, the PRA aims to reduce the costs for both societies and the PRA associated with the notification process where a society notifies the PRA about changes to lending and treasury approaches.

2.11 The PRA acknowledges that if SS20/15 is removed, there may be greater risk taking in building societies which will need to be appropriately managed. In extremis there is potential for risk taking that is not appropriately managed to have costs in terms of safety and soundness. However, the PRA does not consider these costs to be likely as there are sufficient regulatory requirements and tools in place to supervise building societies' risk management strategies (as set out in paragraph 2.4). While the PRA considers that the benefits of withdrawing SS20/15 outweigh the costs, it acknowledges that these costs and benefits are not easily quantifiable.

‘Have regards’ analysis

2.12 In developing these proposals, the PRA has had regard to its framework of regulatory principles as set out in section 3B of FSMA, as well as those set out in the Legislative and Regulatory Reform Act 2006 (LRRA). The regulatory principles that the PRA considers are most material to the proposals include:

• The principle that a burden or restriction should be proportionate to the benefits which are expected to result from the imposition of that burden (FSMA regulatory principle): The proposed withdrawal of SS20/15 is driven by this principle. SS20/25 sets expectations on building societies’ lending activities which the PRA acknowledges is no longer proportionate for the reasons set out in this CP.
• The desirability where appropriate of the PRA exercising its functions in a way that recognises differences in the nature of, and objectives of, businesses carried on by different persons (including different kinds of persons such as mutual societies and other kinds of business organisation) subject to requirements imposed by or under FSMA (FSMA regulatory principle): At present, SS20/15 applies to building societies but not banks undertaking similar business. One issue with SS20/15 highlighted during the PRA's engagement with industry is the lack of a level playing field between banks and building societies caused by expectations that apply only to building societies. The PRA considers that withdrawing SS20/15 would improve clarity of the PRA's expectations for banks and building societies.
• The need to use the resources of the PRA in the most efficient and economic way (FSMA regulatory principle): The PRA considers that the discontinuation of SS20/15 will help reduce pressure on its resources by removing expectations currently placed on building societies that the PRA considers are no longer necessary. By relying on existing regulatory requirements and tools such as those outlined in paragraph 2.4, the PRA considers that supervisors’ workload can be used more effectively without compromising on safety and soundness of firms.

2.13 The PRA has had regard to other factors as required. Where analysis has not been provided against a ‘have regard’, it is because the PRA considers that it is not a significant factor for this proposal.

HMT recommendations letter to PRC

2.14 The PRA has had regard to the considerations on growth and competitiveness set out in the HMT recommendations letter to PRC in November 2024. The consideration set out in this letter that the PRA regards as most material to the proposal to withdraw SS20/15 is ‘creating a regulatory environment which facilitates growth through supporting competition and innovation’. The PRA considers that this has been sufficiently examined in paragraphs 2.8 and 2.9, which analyses the impact of the proposal on the PRA’s secondary objectives.

Impact on mutuals

2.15 FSMA requires that the PRA assesses whether the impact of the proposed rules on mutuals will be significantly different from the impact on other firms, and if so, details of the difference. This consideration is central to the proposal set out in this CP as it concerns the withdrawal of guidance that disproportionately affects building societies compared to banks.

Equality and diversity

2.16 In developing its proposals, the PRA has had due regard to the equality objectives under section 149 of the Equality Act 2010. The PRA considers that the proposals do not give rise to equality and diversity implications.

Appendix

1. [Deleted in its entirety] SS20/15 – Supervising building societies' treasury and lending activities