Reeves slams regulation as "boot on the neck of businesses"

Chancellor Rachel Reeves set out a sweeping vision for Britain’s financial future in her keynote Mansion House speech on Tuesday evening, warning that “in too many areas, regulation still acts as a boot on the neck of businesses,” as she unveiled the most comprehensive shake-up of financial services regulation in more than a decade.

Her remarks came shortly after the unveiling of her new financial services strategy on Tuesday, known as the Leeds Reforms, named after the West Yorkshire city she has represented in Parliament for 15 years. The strategy, officially titled the Financial Services Growth and Competitiveness Strategy, lays out a four-part plan to cut red tape, free up investment, and reintroduce “informed risk-taking” into the UK’s financial sector.

Regulate for growth, not just for risk

Addressing an audience of City leaders, investors, and regulators, Reeves said the time had come for regulators across sectors to rethink their role.

“Regulators in other sectors must take up the call I make this evening not to bend to the temptation of excessive caution, but to boldly regulate for growth,” Reeves said noting that the enterprise and innovation that is the lifeblood of economic growth must not be choked off by unnecessary regulation.

The Chancellor said her new package would “put pounds in the pockets of working people” by creating better mortgage deals, stronger savings returns, and more well-paying jobs across the country.

Leeds Reforms: four-pronged plan

Reeves outlined four key pillars of the reforms:

Rolling back excessive regulation: Reeves announced a rollback of rules that she said had “gone too far in seeking to eliminate risk,” adding that overregulation has stifled competitiveness and innovation.
Targeted support for strong sectors: The government will make strategic changes in areas where the UK already has global advantages, such as fintech and asset management.
Unlocking productive capital: Changes to capital requirements are being introduced to free up investment for infrastructure, green energy, and business growth.
Boosting retail investment: The government aims to encourage wider participation in the stock market and facilitate access to home ownership, particularly for low-income families. Reeves confirmed measures to make it easier for first-time buyers to secure mortgages, potentially helping over 30,000 people.

Reforming the Financial Ombudsman Service

In what she described as the “most significant reform to the Financial Ombudsman Service since its inception”, Reeves proposed a 10-year time limit on claims to streamline redress and restore the service to its “original purpose as a simple, impartial arbitration service and ensuring that it no longer acts as a quasi-regulator.”

She also welcomed the Ombudsman’s announcement to lower the interest rate it applies to complaints from 8% to the Bank of England base rate plus 1%, a move expected to ease the compensation burden on businesses and accelerate case resolutions.

Cutting authorisation delays and reviewing consumer duty

Reeves has introduced new performance targets for the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) to reduce delays in authorisations and approvals. Additionally, she has asked the FCA to assess the impact of the Consumer Duty on wholesale markets, amid concerns it may be deterring legitimate business-to-business activity.

The Chancellor also indicated that the Senior Managers and Certification Regime, a post-2008 measure designed to hold top bankers accountable, will be “radically streamlined” to cut burdens on firms.

A bold bet on deregulation

Treasury officials say Reeves’s approach signals a deliberate move away from the post-2008 financial orthodoxy, reintroducing “informed risk-taking” into financial services and recasting the City as an engine of growth rather than a source of systemic vulnerability.

While Bank of England Governor Andrew Bailey struck a more cautious tone in his own remarks, warning of the risks posed by the global trade conflict triggered by US tariffs, Reeves remained firm in her commitment to bold reform.

Britain cannot meet its growth ambitions without “a fighting fit and thriving financial sector,” she declared.

As economic challenges mount and pressure to deliver growth intensifies, Reeves has made clear that loosening the regulatory straitjacket is now central to her government’s strategy.