The Association of Financial Mutuals (AFM) has launched a strategy calling on the government and regulators to put financial mutuals at the heart of its plan to double the size of the co-op and mutuals sector.
It says changes are needed to boost financial resilience and improve financial outcomes across the UK, particularly among underserved and harder-to-reach communities.
The strategy, Closing the Gaps: Building Financial Resilience, argues that financial mutuals are well placed to help support three major national priorities: helping individuals and families deal with financial shocks, reducing pressure on the state and the NHS, and encouraging wider investment across the UK, beyond London and the southeast.
AFM says the government’s commitment to grow the mutual and co-operative sector is a welcome opportunity to build a more inclusive financial system. The strategy highlights the ability of member-owned mutual organisations to reach groups often overlooked by mainstream financial services firms and providers, helping to build financial resilience where it is most needed.
The strategy identifies three major resilience gaps facing the UK economy where mutuals can help:
- The Protection Gap: Too many people would struggle quickly if illness, injury or job loss meant they lost their income, the AFM argues.
- The Healthcare Gap: Ill-health is keeping millions of people out of work and adding pressure to households, employers, the NHS and the wider economy, says the AFM
- The Savings Gap: Many households have little or no savings, while others hold most of their money in cash when longer-term saving or investment may better meet their goals, warns the apex.
“Financial mutuals have a proven track record of supporting people through uncertainty and helping communities throughout the country build long-term resilience,” said CEO Andrew Whyte. “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.
Related: Interview, Andrew Whyte, CEO, Association of Finance Mutuals
“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.”
The strategy calls on the government to take practical steps to help mutuals close these gaps, including:
- Introducing frameworks for auto-enrolment into long-term savings, investment, and protection products.
- Removing barriers that discourage take-up of health cash plans.Removing barriers that discourage take-up of health cash plans.
- Reforming rules that restrict mutuals’ ability to raise external capital.
- Expanding access to targeted financial support and simplified advice.
- Reforming the Public Interest Entity (PIE) regime to reduce disproportionate audit costs for smaller mutuals.
- Implementing the recommendations from the Law Commission’s Review of Friendly Society Legislation promptly.
The AFM added: “Financial mutuals already make a significant contribution to the UK economy and to household resilience. AFM members manage millions of savings, pensions, protection and healthcare policies across the UK and Ireland.”
The apex said the government has already taken positive steps to engage with the mutual sector, including through work to understand barriers to growth. It is now urging ministers, regulators and industry to turn that ambition into practical reforms.
“AFM will be undertaking a programme of policymaking engagement in the upcoming months based on the report recommendations,” it added.
