By Matt Cavanagh, Senior Counsel

The choreography of yesterday’s announcements – the Chancellor’s annual Mansion House speech in the City of London, on the heels of her trip up to Leeds to launch the Financial Services strategy earlier in the day – reflects the government’s determination to combine its championing of the City, with reminding voters that financial services is not all about London, that the sector creates and sustains thousands of jobs far away from the capital, as well as facilitating investment in all the different sectors and regions of the British economy. (Leeds is Reeves’ constituency city, which she is trying – with some success – to get people to refer to as the “Northern Square Mile”, and yesterday’s announcements as the “Leeds Reforms”.)

Reeves’ speech had the same upbeat, future-focused tone as the Spending Review, continuing her and Keir Starmer’s attempt to move away from the more negative rhetoric of 2024. Back on Treasury turf, Reeves cut an assured figure, in stark contrast to her last big moment in the public eye, and she was grateful for the warm response in the room – even if few of the attendees would recognise her framing of these reforms as the most radical in a generation.

Much of the detail, including in areas likely to be controversial with Labour MPs like ring-fencing and ISA reform, will have to wait on yet more reviews. But the sector should be thankful, in a time of accelerating political polarisation, to have a Labour Chancellor who is determined to champion financial services and its role in driving UK growth and competitiveness, and willing to absorb a degree of political pain in doing so.

There has been no shortage of voices on the left of Labour condemning the speech and announcements as a reversion to “discredited trickle-down economics”, though at the moment that reaction looks more like “noises off” than anything more organised. More fundamentally, while many will agree with her that our regulatory culture is too risk-averse – and often focused on the wrong kinds of risks – trying to change that comes with real risks itself, in political terms.  

Regulators complain that they face an asymmetry of risk and reward: if they relax the rules and a crisis follows, they will certainly be blamed, while if growth follows, they are unlikely to be the ones who get the praise. For politicians, the scales are more balanced; and for the present government, given the fiscal straitjacket its inheritance and its own decisions have placed it in, it is perhaps not surprising if growth is deemed worth the risk. But there are obvious scenarios in which future voters’ attitudes to these reforms – government-sponsored nudges away from cash savings and into equities, or changes to ring-fencing or capital requirements, if indeed they come to pass, or even relaxation of mortgage requirements – could turn decidedly sour. Reeves is famously not the cavalier, swashbuckling type of politician: she will have thought carefully about these scenarios, and the sector should acknowledge the personal capital she is investing in deciding to press on, even if they believe she should be going further and faster.

Big Bang or a whimper? Ask the Parliamentary Labour Party –
Dave Eaton

Leeds may be 222 miles from Edinburgh, but how close are their eponymous financial services reforms packages?

You can’t avoid naming your big bang 4.0 (or is it 5.0?) FS reforms, for ease of media and industry reference if nothing else. “Leeds Reforms” slips off the tongue much easier than “the second Mansion House package” and avoids confusion with May’s Mansion House Accord. Naming the reforms after another of the UK’s financial hubs does, however, invite comparison to the Conservative’s 2022 Edinburgh Reforms.

Announcing those reforms, Chancellor Jeremy Hunt committed to securing “The UK’s status as one of the most open, dynamic and competitive financial services hubs in the world”. Since then, the UK’s IPO draught has worsened, the proportion of consumers holding over £10,000 in cash among those with a relatively high-risk appetite has increased and regulatory uncertainty has led to the Supreme Court deciding the fate of the motor finance sector.

The Edinburgh Reforms were compiled in the same way contestants used to do well on Supermarket Sweep: get as much off the shelf into your basket as your can, i.e., anything the Treasury or the regulators were working on can be paused until you can announce individual reforms as a package and if needs be you can re-announce initiatives to aid the coherence of your measures.

The eagle-eyed may have noticed that some of today’s announcements look familiar:

• Targeted support was first mooted in a 2023 AGBR Discussion Paper and proposals was announced last month
• Today’s announcement to review consumer investment disclosures are a reference to the FCA’s Consumer Composite Investment review, ongoing since December 2024
• Reforms to SMCR were first announced in the Edinburgh Reforms. The first PRA/FCA Discussion Paper was published in March 2023
• The new concierge service was first mooted in the Harrington Review, published November 2023

Whether rebranded or reannounced, the Leeds Reform do nonetheless look to boost growth through mobilising capital (through measures like targeted support, changing the MREL threshold and including LTAFs in stocks and shares ISAs), support the international competitiveness of the UK as a regulatory jurisdiction (by setting out a digital markets plan, launching a ring fencing review and removing the Certification Regime), and provide confidence in both the UK’s commitment to growth sectors and regulatory consistency (through the publication of a dedicated FS industrial strategy, subordinating FOS to the FCA and reviewing the applicability of the Consumer Duty to wholesale relationships). However, when debating how to “regulate for growth, not just for risk”, we need to remember that entails political risk.

At their last TSC Accountability hearing, the FCA were asked “Are you worried you’ll get the blame?” if consumers suffer loss as a result of reforms to regulate for growth. It’s the FCA’s fear that the political cover they’ve enjoyed from Government won’t survive contact with a consumer redress event, leading CEO Nikhil Rathi to call on the Government to introduce “failure metrics” to cover things like home repossessions arising from mortgage affordability reforms.

Whether it’s home repossessions or consumers losing money through investments they made as a result of targeted support, simplified advice or simply the persuasion of the new Government-based retail investment campaign, the risk is less one of regulatory clarity and more political sustainability. It’s one thing if a single constituent writes to a backbench MP to complain about loss: their office can direct them to the FCA who can explain that this is a natural consequence of the reintroduction of “informed risk-taking”.

But if 100 constituents form a support group and say they’re dissatisfied with a government or regulatory response, it’s harder to rebuff their requests for representation and support. If MPs across the country start receiving letters from a 100,000+ redress campaign alleging regulatory failure, coordinated by a consumer group or media outlet, it’s harder for the EST to rebuff her backbenchers, too.

We’ve seen what happens when backbenchers mobilise. The welfare reform rebellion may have affected the Chancellor’s fiscal headroom, but misgivings among the sizable number of Labour MPs either formally affiliated or informally aligned to the mutuals sector look to have seen off the controversial ISA Review. The Government may reply that industry is more supportive of the carrot of a Tell Sid 2.0, before the stick of tax reforms. That may be true, but the Parliamentary Labour Party has once again shown it has more sway over Treasury policy than Rachel Reeves may have imagined a year ago.

Finally, on continued supply-side reforms to revitalise the UK’s capital markets, sceptics may question whether anything can be done to counter the gravitational pull of US valuations and the depth of their capital markets, or the risk of private finance (particularly given the obligations placed on public companies).

And as the Government have seen repeatedly since the Chancellor’s last Mansion House speech, the regulators are more than happy to highlight tax policy as a deciding listings factor that sits firmly with Government. With speculation growing that the UK’s financial services industry may fall victim to the Chancellor’s diminishing fiscal headroom and the lack of an FS tax roadmap, the regulators may not have to do much to deflect blame for the UK’s capital market woes.

And with forthcoming decisions on special educational needs support and the two-child benefit cap, the Chancellor may well to prefer to walk from Edinburgh to Leeds and back again before trying to persuade Labour MPs to reform the tax system.

The UK Government has introduced a comprehensive 10-year strategy to position the UK as a top global destination for financial services firms to invest, innovate, and expand both domestically and internationally.

The UK Government’s new 10-year Financial Services strategy is explicitly tied to its modern Industrial Strategy. In fact, financial services is one of the eight “growth-driving” priority sectors the government has identified. Reflecting this status, the strategy – published in mid-2025 – aims to cement the UK as the “global location of choice” for financial firms. It spans the whole sector (from wholesale markets to consumer banking) and stresses innovation, digitalisation and emerging technologies like AI. At its core are five “pillars” of reform, focused on:

• Delivering a competitive regulatory environment
• Harnessing the UK’s global leadership in financial services
• Embracing innovation and leveraging the UK’s fintech leadership
• Building a retail investment culture and delivering prosperity through UK capital markets
• Setting the UK’s financial services sector up with the skills and talent it needs

A core theme is strong government–industry collaboration. For example, HM Treasury has launched a public consultation (open until 9 September 2025) on cross-cutting regulatory reforms designed to make supervision “effective, proportionate and in line with the government’s ambition on regulation”. Unveiled by Chancellor Rachel Reeves at her July Mansion House speech, the package signals a clear pro-investment, pro-growth bias. Reeves has explicitly pledged to ease regulation and unlock investment in the sector,  describing the reforms as the most “wide ranging in a decade”. The government also commits to working “closely with regulators and industry to implement the reforms, ensuring that growth ambitions are aligned with investor protection”. The key question now is whether regulators will translate this growth focused agenda into action.

Wholesale markets reforms

The launch of the Growth and Competitiveness Strategy contains a broad package of wholesale market reforms intended to strengthen UK markets and drive economic growth.

In its vision, the Government and FCA explicitly describe an ideal UK wholesale market as one that “supports both the domestic economy and growth” and is “open to innovation”, by targeting sectors like insurance, investment management and sustainable finance as engines of growth. For example, the insurance sector measures aim to deepen risk capacity and innovation: HMT is consulting on a more flexible “risk transformation” regime for insurance-linked securities to allow insurers to transfer risk into capital markets more easily. Similarly, a new competitive framework for captive insurance is being introduced – expected to “enhance the international competitiveness” of UK insurers and “support economic growth”. Together these are designed to boost capacity and capital for underwriting large risks, with the hope of making the UK “the most attractive place” for insurance and reinsurance.

The reforms look to harness international growth opportunities: strengthening ties with advanced and emerging economies (EU, US, China, India and the Gulf), and rolling out Overseas Recognition Regimes to ease cross-border financial services. The long-awaited concierge service called for by the City of London will work out of the Office for Investment to help overseas firms navigate UK regulations. These moves aim to attract foreign capital and business into the UK wholesale markets, in line with the Strategy’s goal of deepening global connectivity and market openness.

On the regulatory front, the emphasis is on cutting delays and red tape. The FCA and PRA must now meet much shorter deadlines for new firm authorisations and senior manager approvals. A streamlined start-up authorisation regime is promised for high-growth firms. The Strategy heralds “the most significant reform” of the Financial Ombudsman Service to improve predictability, and a review of the Consumer Duty only a year after its full implementation for all products, in a bid to avoid one-size-fits-all rules on wholesale firms. The Senior Managers & Certification Regime will be pared back to reduce compliance burdens while in banking, capital rules will be tweaked for growth: the MREL threshold rises, Basel 3.1 is phased in by 2027–28, and ringfencing is being reviewed for greater flexibility.

The package also lays claim to progress on green finance. Reiterating the UK’s ambition to be “a global leader in sustainable finance”, updates on sustainability reporting standards, measures to grow transition finance and voluntary carbon/nature markets, and tighter rules on ESG ratings are not new. What is new is the revelation that the Government will not pursue a UK Green Taxonomy, focusing instead on higher-priority policies.

In sum, the strategy’s wholesale markets reforms – from faster approvals and lighter conduct rules to enhanced international engagement – are explicitly framed as growth measures. By making it easier and more attractive to raise capital, innovate and expand internationally, these reforms aim to underpin the UK’s stated growth mission of a more dynamic, outward looking financial sector.