started to show an uptick in areas like ‘ new to arrears ’. this 4 supply matters − speech by andrew bailey | bank of england 5 as at 19 april 2022 6 monetary policy report - february 2023 | bank of england 7 uk consumer confidence index 2023 | statista 8 credit conditions survey - 2023 q1 | bank of england 9 financial policy summary and record - march 2023 | bank of england 10 financial stability report - december 2022 | bank of england bank of england uptick is not yet at a level that indicates a material amount of credit risk is crystallising, but rather i take it as a clear warning that firms need to take action now to be prepared both to support their customers and preserve their resilience should the stress that we are observing result in a marked deterioration in their credit portfolios. that is exactly why we put credit risk at the top of our list of supervisory priorities11 for uk deposit takers in our annual letter to ceos in january. what do we expect mutuals to do? as i noted at the start, your services are instrumental in supporting uk households and businesses. it ’ s in all our interests that this is maintained, both to the members who rely on your services and also to support the resilience of the broader economy. but it is also vitally important that the risks of doing so are managed prudently. whilst the mutual sector generally has a good track record of doing this, it is important that firms continue to enhance the way they manage risk. aligned with this, we ’ ve seen the most proactive firms taking steps that include : • • • • • • • using early warning indicator frameworks that highlight emerging risks in portfolios at an earlier stage than more traditional, backward - looking credit metrics. reviewing credit risk management frameworks to ensure they remain appropriate, with robust governance and controls around credit and affordability assessments. reviewing lending criteria to ensure they remain prudent and sustainable. assessing concentration risks in their portfolio. this is especially important for firm - specific concentrations, for example in the type or location of their customer base. regularly analysing whether the levels of credit loss provisions are sufficient and ensuring these are recognised in a timely manner. early outreach to customers whose finances are most vulnerable in the current circumstances whilst bearing in mind relevant fca guidance12. ensuring that customer support and collections arrangements are appropriately scaled so they can expand rapidly if need be. this is, of course

fca discussion paper18, setting out proposals to introduce a new regulatory framework on diversity, equity and inclusion in the financial sector. i strongly encourage you to engage with those proposals once they are published. in conclusion let me briefly sum up. i ’ ve stressed today the important role that mutuals play in providing your services to a diverse range of households and business right across the uk. it ’ s vital those services are 16 cp4 / 23 - the strong and simple framework : liquidity and disclosure requirements for simpler - regime firms | bank of england 17 fs1 / 21 – ‘ responses to dp1 / 21 ‘ a strong and simple prudential framework for non - systemic banks and building societies ’ | bank of england 18 dp2 / 21 – diversity and inclusion in the financial sector – working together to drive change | bank of england bank of england underpinned by resilient firms. the outlook for credit risk remains uncertain and we therefore expect firms to be forward - looking in how you manage the risks this presents. we are doing the same. i also set out the ways in which we are evolving our supervisory and regulatory regimes to ensure that they can support growth and innovation within a sustainable and resilient mutual sector. i encourage you to engage actively with those changes to help us make them work well. finally, i was asked before i came up to liverpool whether i was looking forward to the q & a section which will follow my remarks. the answer of course is a resounding ‘ yes ’ as i enjoy the open and frank engagement i have with bsa members. but i also know that some of your questions can be really quite challenging. so, my response, in recognition of events here next week was to quote gina g by saying, ‘ ooh, aah … just a little bit ’ 19 ( sorry i just couldn ’ t resist that one ). i would like to thank phil evans, alison scott, vicky saporta, monica shant, rogier wieffer, nick lock, vrunda chunilal, isabel jennings and anjli shah, for their assistance in preparing these remarks. thank you. 19 ooh aah just a little bit, gina g, 1996, uk