Creating a level playing field for building societies: The Bank of England’s plan to nurture competition within financial services (CP11/25)

21 July 2025

3 minute read

On 8 May 2025, the Bank of England issued a consultation paper (CP11/25), that proposed the discontinuation of SS20/15: Supervising Building Societies Treasury and Lending Activities – more commonly known as the Building Society Sourcebook.

Proposed discontinuation of SS20/15

The Bank of England’s proposed discontinuation of SS20/15 would be effective from January 2026, removing legacy restrictions dating back to the 1980s imposed upon building society credit risk appetite and treasury activities, enabling mutuals with decades (sometimes centuries) of accumulated experience to compete on a more level playing field with other lenders of comparable size and complexity who are not subject to such restrictions.

This proposal supports competition in the market and has the widespread support of the mutual sector and UK trade bodies.

Opportunity for building societies to scale up business

Building societies have a broad range of business models, many with deep specialisms in niche markets, however, the proposed alleviation of restrictions is likely to initiate a review of many societies’ lending (and funding) strategies and appetites, including considering how to compete more actively in higher volume mainstream mortgage markets. Incorporating more automation into the underwriting process will be a key part of increasing the efficiency of the decisioning process to accommodate the higher volume of lending.

Maintaining positive customer experience

However, it is important that these high-volume strategies that incorporate more automation do not negatively impact customer experience. Especially considering the increasing regulatory scrutiny being placed on ensuring responsible and inclusive lending practices.

In its October 2024 letter to building society chief executives, the Financial Conduct Authority (FCA) outlined its strategic priorities for the sector. These included embedding the Consumer Duty, ensuring fair treatment of customers facing financial difficulties, strengthening operational resilience—particularly during technology transformation programmes, and maintaining inclusive access to banking services.

Striking the right balance…

The challenge of growing businesses whilst continuing to maintain high levels of customer (and broker) service can be difficult. Achieving success in this area can often be about ensuring processes work more efficiently, allowing valuable skilled human resources to be utilised more effectively, and evolving processes where manual intervention does not add value to become more automated.

How to automate processes responsibly

At 4most, we understand that change can feel overwhelming. There’s often hesitation around adopting automation, especially with concerns about creating a ‘computer says no’ culture that lacks the personal service building society customers value. Introducing automation is a cultural shift that must be managed with care to help both colleagues and customers understand the benefits. This requires clear communication, transparency in decision-making, and strong portfolio-level monitoring. When approached thoughtfully, this change can deliver real benefits for everyone involved.

4most’s Knowledge Elicitation Process (KEP)

Our Knowledge Elicitation Process (KEP) captures the views of the experts in a business to create statistical outputs that can be used for modelling. The techniques we use ensure that business experts are fully involved throughout the process, with their knowledge directly shaping the final model or ruleset. This collaborative approach builds trust in both the model and its outputs. By using a model to score applications, or other parts of the process, we can ease the pressure on underwriting teams. This allows them to focus their specialist skills on more complex, niche cases where their expertise is most valuable. It also enables the business to scale more effectively, without needing to expand the team.

As KEP uses the experts’ views to develop the model, historic data and defaults are not required for the development. Data volumes, particularly mortgage defaults, are a challenge for many lenders – even large organisations have struggled for robust modelling volumes. This process has been utilised by many of our clients, including building societies, who now have a robust risk ranking model in place to support their operations.

KEP can act as a springboard in the transition to a more data and technology driven approach, supporting the whole organisation to evolve and prosper in a changing regulatory and commercial environment.