March 31st marks the end of the transition period for in-scope firms to implement the FCA’s new operational resilience rules, presenting a unique opportunity to demonstrate strength and stability in an increasingly risk-aware marketplace.
Given the Labour Party’s commitment to doubling the size of the mutual economy, the UK’s regulated firms find themselves at an inflexion point, where capturing the benefits of a growth-focused government agenda will demand that resilience is embedded, not only as a compliance obligation but as the foundation for an evolving service model.
Building societies, whose last few years have been largely characterised by heightened vulnerability across household finances, have nonetheless provided a degree of stability in UK finance.
As per data from the BSA, building societies accounted for 72% of the growth in the mortgage market in the six months to September 2024.
Now, with profitability expected to reduce back towards their 10-year averages in 2025, building societies face an expanding risk surface, increased regulatory scrutiny, and higher operating costs.
Richard Williams, Broadgate’s Senior Principal Risk Consultant for the UK market, explores in more detail below.
A Regulatory Recap
The FCA has set out its 2025 strategy for building societies, spotlighting six priority focus areas:
1. Consumer Duty
2. Treatment of Customers in Financial Difficulty
3. Operational Resilience
4. Access (ensuring customers aren’t unreasonably or unlawfully excluded from payment accounts and banking services)
5. Financial Crime and Fraud
6. Sustainable Finance
Consumer Duty remains the organising principle of the FCA’s regulatory agenda in 2025, reflecting the broader global trend of a move to a more customer-centric future.
Interestingly, it’s an area where jurisdictions on both sides of the Atlantic are somewhat aligned, with the UK taking a notably more outcome-focused approach than many of its international counterparts.
This reflects the recent trends we’re seeing in the talent market, including increased vacancies for candidates with vulnerable client expertise.
Emerging Risks
Tech Troubles
According to data from the UK’s Treasury Committee, nine of the top banks and building societies accumulated at least 803 hours (over 33 days) in unplanned tech and systems outages in the last two years.
Despite tech’s big promises, the transition period is proving difficult to navigate for UK financial services.
We’re seeing building societies lean on some innovative partnership opportunities in FinTech to bridge digitalisation gaps, like Nottingham Building Society’s collaboration with Zest.
While digitalisation is inherently aligned with the focus of Consumer Duty (better customer outcomes), it also adds additional layers of operational complexity and risk. This also covers third-, fourth-, and even fifth-party risk management, an area where we expect to face significant disruption in the year ahead.
Cybersecurity
According to the National Audit Office, the ‘cyber threat to the UK government is severe and advancing quickly,’ a challenge that’s exacerbated by indelible skill gaps and an overreliance on legacy systems.
The banking industry alone has experienced a 1318% increase in ransomware attacks in the last few years (according to Beyond Encryption), and with the rise of deepfakes, a lower bar to entry, and thinly stretched security teams, it’s a challenge that looks set to continue.
Embedding cybersecurity fundamentals into the modern workforce is essential – it’s estimated that 90% of all cyber-attacks are down to human error.
Adaption
The trend of firms scaling back on service offerings continues in 2025, one of many ways building societies are adapting to leaner profit margins, lower rates, and digitalisation.
Correspondingly, Change and Transformation-focused roles are on the rise, with regulatory and risk expertise commonly targeted by hiring managers.
Shifts toward centralisation and digital-first service models are increasingly common, with a prime example being Nationwide’s recent decision to phase out passbooks, a product that a reported 320,000 of their customers still rely on.
Building a healthy risk culture with sturdy contingency plans and consistent stress testing will help pave the way for growth in the coming years.
We’re eager to help firms navigate these landmark changes with dependable, informed hiring services. Whether you need market insight, expert recruitment advice, or a sounding board for your workforce strategy, we’d love to hear from you. Contact Richard here to learn more about Broadgate’s service: Richard.williams@broadgatessearch.com.