UK Regulators Name Six Firms for Debut Scale-Up Unit Cohort
The PRA and FCA select challenger banks and building societies for tailored growth support, advancing Britain's push to make regulation a competitive edge rather than a barrier.
The UK’s financial watchdogs on 3 February named six banks and building societies to join the first cohort of their joint Scale-Up Unit, a regulatory support programme designed to help fast-growing deposit-takers navigate capital requirements, product launches, and expansion without regulatory friction stalling momentum.
According to the FCA, the selected firms—Allica Bank, ClearBank, Monument Bank, Nottingham Building Society, OakNorth Bank, and Zopa Bank—will receive dedicated regulatory guidance as they develop new products, attract customers, and move into new markets. The unit, announced in October 2025 as part of Chancellor Rachel Reeves’ growth agenda, targets firms that have outgrown the New Bank Start-Up Unit but face complexity when scaling operations, particularly around evolving capital requirements and product approvals.
5 years
£3bn–£20bn
+20% over 3 years
What the Unit Provides
The Scale-Up Unit offers four core services, according to the Bank of England: out-of-cycle capital reviews for rapidly growing firms; coordination of regulatory submissions such as variation-of-permission applications; early-stage discussion on innovative products and their regulatory treatment; and direct input into PRA and FCA policy-making processes affecting scaling firms. Regulators will meet with cohort members both collectively and individually throughout 2026.
The initiative differs from the FCA’s existing sandbox programmes, which focus on early-stage innovation testing. As Investment Executive noted, the unit aims to help firms cope with regulatory requirements that change as they grow and with regulator expectations as they expand into new sectors—challenges that emerge after authorisation but before firms reach the scale where dedicated supervisory teams and external advisory capacity become feasible.
“The Unit should provide banks like Allica with more capital certainty and more regulatory support to boost lending to the established SMEs that power the UK’s real economy.”
— Richard Davies, CEO, Allica Bank
Cohort Composition and Strategic Focus
The six selected firms are digital-first challengers targeting underserved segments. Allica Bank focuses on SMEs with 5 to 250 employees; OakNorth, which has lent over $21 billion to mid-market businesses according to the PRA, targets property and business lending; ClearBank provides clearing infrastructure; Zopa operates in consumer credit; Monument serves international clients; and Nottingham Building Society is the sole mutual in the cohort. All are dual-regulated by the PRA and FCA and have been operating for more than five years.
The regulators expect the service to be of particular interest to firms with balance sheets between £3 billion and £20 billion—a range where regulatory complexity increases sharply but firms may lack the resources of systemically important institutions. The PRA and FCA will use insights from the cohort to refine regulatory processes for the broader sector, feeding scaling firms’ experiences into future policy-making.
The Scale-Up Unit builds on the PRA’s New Bank Start-Up Unit, established in 2016, which has supported over 20 new banks through authorisation. It also complements recent regulatory simplifications including the Small Domestic Deposit Takers (SDDT) regime, which applies lighter capital rules to smaller, UK-focused banks. As of October 2025, 56 firms had opted into SDDT status, with 24 joining after the PRA proposed simplified Pillar 1 and Pillar 2a capital calculations.
Broader Regulatory Ecosystem
The unit sits within a layered support architecture. According to the FCA, it complements existing tools including the Regulatory Sandbox (which enables controlled testing of innovative products), the Early and High Growth Oversight function (for recently authorised firms), the Pre-Application Support Service, and the AI Lab. Each targets a different stage of firm development, from pre-authorisation through scaling to maturity.
The FCA confirmed it will open expressions of interest in spring 2026 for a separate solo-regulated Scale-Up cohort, extending support to investment firms, fund managers, and payment institutions not supervised by the PRA. A second dual-regulated cohort for banks and building societies will also accept applications later in 2026. Insurers can request support on an ongoing, case-by-case basis rather than through cohort entry.
- Regulatory capacity becomes a deliberate growth enabler, not just a compliance checkpoint
- Challenger banks gain structural advantage over incumbents in navigating capital and product approvals
- Cross-cohort learning could accelerate homogenisation of challenger strategies and risk models
- Solo-regulated firms (fintechs, payment firms) remain outside the initial framework until mid-2026
Alignment with Competitiveness Mandate
The initiative reflects the PRA and FCA’s secondary objective to support UK competitiveness and growth, introduced under the Financial Services and Markets Act 2023. Jessica Rusu, the FCA’s chief data officer, stated the unit “enhances the support available to firms as they move from start-up to scale up” as part of the regulator’s strategy to support growth and competitiveness, according to Finextra.
The unit also aligns with broader deregulatory measures including Basel 3.1 implementation, Solvency UK reforms for insurers, and streamlining of the Senior Managers and Certification Regime, as confirmed by the Bank of England. Together, these initiatives aim to reduce regulatory burden while maintaining resilience—positioning lighter-touch supervision as a competitive differentiator relative to the EU and US.
| Programme | Target Stage | Primary Function |
|---|---|---|
| New Bank Start-Up Unit | Pre-authorisation | Application support |
| Regulatory Sandbox | Early innovation | Controlled product testing |
| Scale-Up Unit | 5+ years, £3bn–£20bn | Capital, VoP, product guidance |
| Early & High Growth Oversight | Post-authorisation | Supervisory engagement |
What to Watch
The effectiveness of the unit will hinge on whether it meaningfully accelerates time-to-market for new products or simply formalises existing informal channels between firms and supervisors. Firms outside the cohort will watch for evidence of preferential treatment or material advantages in capital negotiations. The spring 2026 solo-regulated cohort will test whether the model translates to payment firms and asset managers, where regulatory bottlenecks differ from deposit-taking. If successful, the unit could become a permanent fixture in the UK’s regulatory architecture—and a template for jurisdictions seeking to make supervision adaptive rather than static. The test is whether tailored support scales beyond six firms without creating two-tier regulation.