ICMIF member the Association of Financial Mutuals (AFM) has launched a new strategy calling on the UK Government and regulators to place financial mutuals at the centre of efforts to improve financial resilience and outcomes for households across the UK.

The strategy, Closing the Gaps: Building Financial Resilience, sets out how member-owned financial mutuals can help address some of the most pressing challenges facing individuals, families and communities, particularly those underserved by mainstream financial services.

AFM says the Government’s commitment to double the size of the mutual and co-operative sector offers an important opportunity to build a more inclusive financial system. Its report argues that financial mutuals are well placed to support three national priorities: helping people cope with financial shocks, reducing pressure on the state and the NHS, and encouraging wider investment beyond London and the southeast.

The strategy identifies three major resilience gaps where financial mutuals can play a greater role:

• The protection gap: too many people would struggle quickly if illness, injury or job loss meant they lost their income.
• 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.
• 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.

Andrew Whyte, CEO of the Association of Financial Mutuals, said: “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 cooperative 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,” Whyte concluded.

To help close these gaps, the strategy calls for practical reforms including frameworks for auto-enrolment into long-term savings, investment and protection products; the removal of barriers that discourage take-up of health cash plans; changes to rules that restrict mutuals’ ability to raise external capital; wider access to targeted financial support and simplified advice; reform of the Public Interest Entity (PIE) regime to reduce disproportionate audit costs for smaller mutuals; and prompt implementation of the Law Commission’s Review of Friendly Society Legislation.

AFM says financial mutuals already make a significant contribution to the UK economy and to household resilience, with its members managing millions of savings, pensions, protection and healthcare policies across the UK and Ireland.

The association says the Government has already taken positive steps to engage with the mutual sector, including work to understand barriers to growth. The AFM is now urging ministers, regulators and industry stakeholders to turn that ambition into practical reforms that support a more resilient and inclusive financial system.

AFM will undertake a programme of policy engagement in the coming months based on the report’s recommendations.