Leeds Reforms to boost investment, cut red tape, and back UK financial services

The UK government today unveiled its most comprehensive financial regulation reforms in over a decade, aiming to transform the UK into the world’s leading destination for financial services businesses by 2035.

While the reforms span consumer finance and savings, today’s announcement placed a strong focus on supporting businesses, particularly in investment banking, fintech, and asset management. Critical changes to regulatory frameworks, dispute resolution, and oversight regimes are at the heart of a new Financial Services Growth and Competitiveness Plan, a key element of the UK’s modern Industrial Strategy.

Resetting the regulatory landscape for businesses

At the centre of the business-facing reforms is a reset of the Financial Ombudsman Service (FOS) and a review of the Consumer Duty’s impact on wholesale markets.

The FOS will be returned to its original purpose as a “simple, impartial dispute resolution service which quickly and effectively deals with complaints against financial services firms under today’s reforms instead of acting as a quasi-regulator”. Its decisions will now more closely align with Financial Conduct Authority (FCA) rules. This change responds directly to widespread concerns among financial firms that past inconsistencies in FOS judgments created unpredictability, stifling innovation and deterring investment.

“Reforming the Financial Ombudsman Service, streamlining regulation in areas such as the Senior Managers and Certification Regime and the Consumer Duty, and supporting work by regulators to unlock capital for lending, will all help to drive investment and create a more pro-growth operating environment. 

“Having a regulatory system that allows for appropriate risk-taking is vital to ensuring the sector can better support UK businesses, consumers and the government’s growth mission” he added.

The FCA’s Consumer Duty rules, originally designed to protect retail customers, will now be reviewed to assess their impact on wholesale firms like investment banks and asset managers. Industry leaders have raised concerns that the Duty’s application in business-to-business contexts adds unnecessary compliance burdens. The review is seen as a critical step in creating regulatory clarity and efficiency for professional financial institutions.

Creating a competitive advantage for UK firms

The government also announced plans to radically streamline the Senior Managers and Certification Regime (SM&CR). Initially introduced to bolster accountability after the 2008 financial crisis, the regime has been criticised for being overly complex and costly. The reforms will aim to cut the burden on firms by half, freeing time and resources for investment and expansion.

Other reforms include:

• Cutting financial red tape to speed up inward investment.
• Launching a new “concierge service” to attract global financial businesses to regional hubs across the UK, including fintech in Leeds and Cardiff, and asset management in Edinburgh.
• Aligning capital requirements and ring-fencing rules with international norms to maintain competitiveness while ensuring stability.
• Supporting long–term capital deployment by unlocking billions through adjustments to the MREL threshold and phased implementation of Basel 3.1 rules from January 2027 in a way that supports UK competitiveness, with UK-focused lenders given the clarity they need to plan and invest.

Financial sector leaders welcomed the reforms as a bold step towards building a more competitive and investment-friendly environment.

“As a bank dedicated to established businesses, the reforms also help unlock much-needed capital investment for the vital SME sector – the UK’s real economy. Ensuring a balanced, competitive environment for these businesses and the UK’s financial system as a whole is vital to securing growth – and we’re pleased with the steps taken today.”

Hannah Gurga, Director General of the Association of British Insurers, noted: ““Closer alignment between the FOS and FCA, alongside a streamlined SM&CR, are critical steps toward delivering the clarity and regulatory environment our industry needs to thrive.”

Sir Charles Roxburgh, Chair of Lloyd’s, added: ““Today’s announcements — focused on streamlining regulation, reducing burdens, and enabling innovation — are a real boost for the London insurance market.”

Unveiling the reforms at a summit of finance executives in Leeds, Chancellor Rachel Reeves stated: “We fixed the public finances and stabilised the economy. Now we need to double down on our global strengths to put the UK ahead in the global race for financial businesses – creating good skilled jobs in every part of the country and helping savers’ money go further through our Plan for Change.”

“The Leeds Reforms tear down the barriers to attracting investment in the finance sector by reintroducing informed risk-taking into the system, cutting unnecessary red tape, driving more finance into public markets and actively helping international companies to set up in the UK.”

The Leeds Reforms are the latest move in the government’s “Plan for Change”, which aims to create a high-growth, investment-led economy. With a growing emphasis on regional financial hubs and modern regulatory practices, the UK is positioning itself to regain its competitive edge post-Brexit and fuel long-term productivity.