UK Mansion House Speech And The Leeds Reforms: In Search Of Growth

Early on 15 July 2025, long before the UK Chancellor, Rachel Reeves, had even set foot in Mansion House to deliver the traditional annual over-dinner speech, the UK government and regulators released a smorgasbord of policy announcements on the future of UK financial services regulation.

As expected, the direction of travel is set firmly towards targeted deregulation, with a consistent focus on pursuing measures to achieve growth and boost UK competitiveness. In one way or another, almost all parts of the UK financial services industry will be affected.

The centre piece of the announcements is a set of proposals dubbed the "Leeds Reforms", after the Chancellor gave a speech at a summit in Leeds on the morning of the 15 July to showcase her key proposals to boost growth. This is supported by the publication of the Financial Services Growth and Competitiveness Strategy (the "Growth Strategy"), which itself forms part of the previously published UK Modern Industrial Strategy. Sitting underneath these high-level policy announcements is a constellation of more detailed consultation papers, policy statements and guidance documents, as well as further announcements from the UK's financial services regulators.

In the event, the Chancellor's evening speech at Mansion House summarised these (already extensive) initiatives and did not involve the unveiling of any further eye-catching proposals.

In this briefing, we set out our immediate thoughts on the Leeds Reforms and the Growth Strategy in light of the UK government's stated objectives, including the positives and the missed opportunities. At the end of this briefing, we have also summarised key elements of the announcements, organised into themes, although given the proliferation of policy documents, this only scratches the surface in terms of the detail of future anticipated reforms.

1 Our views on the Leeds Reforms and the Growth Strategy

The most striking element of the Leeds Reforms and the Growth Strategy is the scale of the UK government's ambition in this area. Although not every element in the announcements is new, the breadth of the overall set of policy initiatives is still vast, emphasising the size and depth of the UK financial services industry and the importance of the sector to delivering on the government's wider growth objectives.

The level of ambition is encouraging, as is the willingness of the government and regulators to reconsider areas where there were previously some fairly entrenched views (for example, in relation to research unbundling rules or the scope of the Senior Managers and Certification Regime). Some commentators have been talking about the current regulatory and political environment as a once-in-a-generation opportunity to reshape the UK's financial regulatory framework; in light of the flurry of announcements preceding the Mansion House speech, that view is looking increasingly plausible and underscores the importance of industry associations engaging with the government and regulators to further shape the future of regulation in a proportionate and effective way.

The UK government has set a target of making the UK the number one destination for financial services businesses by 2035, which is both brave (in terms of the sheer scale of regulatory changes that would need to be implemented within the next decade) and encouraging as a clear yardstick by which to measure success in this area.

There is no single policy announcement in the mix that stands out as being a "game-changer" by itself. Instead, the Chancellor's aim appears to be to adopt a holistic and incremental approach, identifying areas for a targeted reduction in burdens without an uncontrolled bonfire of regulation. The government's view appears to be that the overall cumulative effect of these changes will bring about the necessary gains in efficiency and competitiveness. While that may be disappointing for some advocates of a second "Big Bang", the careful and considered repeal of rules that impose unnecessary burdens may be more manageable from an implementation perspective and a more credible overall strategy.

That being said, there are clear risks around the ability of the government and regulators to deliver the advertised reforms. The announcements consistently refer to the need for the government to legislate to create the correct statutory framework to support various changes. In turn, that raises potential questions as to whether there will be sufficient parliamentary time to pass the relevant legislation and whether the government can count on the support of backbench MPs to ensure the smooth passage of bills. The ability to sell the changes as being proportionate and technocratic in nature might avoid some of the ideological arguments that might otherwise erupt under a more aggressive deregulatory approach. However, recent developments in relation to cryptoassets show that financial services legislation can easily be delayed by complexity and broader policy debates.

The Chancellor's proposals compare favourably to the EU's equivalent review of financial regulatory burdens currently being undertaken through the EU Savings and Investments Union initiative. The UK's approach involves concrete proposals and appears more advanced than the wide-ranging but currently amorphous exercise led by the European Commission, the output of which remains uncertain. Nonetheless, both the UK and the EU look unable to compete with the fast-paced slashing of regulation in the US being undertaken by the Trump administration, largely facilitated by broad executive orders.

There will need to be consultations before many of the proposed UK changes can be made. Experience suggests that this can lead to substantial amendments to the original proposals, as well as protracted delays and uncertainty over implementation timelines. Given the range of changes that firms may need to implement if they are to realise the full advantages of the various proposals, clarity over the timing and expected content of final rules will be critical.

Nonetheless, we have detected a genuine change in attitude among UK regulators recently, with a more committed focus on international competitiveness and burden reduction, so there are plenty of reasons to be hopeful in this regard.

Fundamentally, though, it may be what is not in the Leeds Reforms or Growth Strategy that could ultimately derail the dream of sustained growth in the UK financial services sector. While the regulatory environment is clearly a critical piece of the larger puzzle, the aim of attracting inward foreign investment and drawing talent to the UK is inherently sensitive to the UK tax regime. Given continuing concerns about the tax treatment of non-domiciled individuals, there is a persistent question mark about whether highly paid senior or up-and-coming financial services professionals will find the UK to be an attractive and competitive jurisdiction in which to base themselves. In addition, increased employment- related taxes may continue to act as a drag on establishing substantial UK operations. Headline tax-related changes, such as the abolition of stamp duty on transfers of UK shares, might have a more important signalling effect but it seems that we will have to wait to see whether this will follow.

In a similar vein, we note that while the government has set out laudable broad ambitions for the UK asset management industry, the proposals do not include any suggestion that restrictive remuneration regimes under MIFIDPRU and AIFMD will be reformed or that the FCA will look again at the implementation of the Investment Firms Prudential Regime (IFPR) to reduce the substantial burden it imposes on UK MiFID investment firms. Given analogous moves to reduce the equivalent obligations on UK banks, we hope that these points will receive a more sympathetic hearing in the new environment and would strongly advocate for this. That being said, the recent FCA prudential proposals for cryptoasset firms seem to point towards extending an IFPR-like regime to other sectors. In light of the apparent longer term aim of a single overarching prudential rulebook for FCA regulated firms, the regulatory appetite for broader reform here remains unclear.

Of course, the Chancellor's speech was not intended to be a comprehensive list of every change that may be planned for the UK regulatory regime. Alongside the carefully coordinated set of policy announcements on the day of the speech, the UK regulators have other ongoing workstreams which may result in further improvements. For example, on 10 July 2025, the FCA published an encouraging announcement that it was reviewing its client classification rules with a view to unlocking more opportunities for wealthy investors. Depending on the approach that is eventually adopted, these sorts of initiatives may widen access to alternative investments and reduce some of the current difficulties that firms have in marketing and providing their products and services to particular customer segments, supplementing the set piece proposals within the Leeds Reforms.

Our overall sense is that the Leeds Reforms and the Growth Strategy are a very encouraging start, but the scale of the task facing the UK government and regulators is daunting. Legislators, regulators and the industry will need to remain in close dialogue over the next few years to realise the full benefits of these reforms and to ensure that the UK financial markets are fit for the coming decades. Nonetheless, given the UK's deep financial services expertise and track record of innovation, we are optimistic that the industry will seize this latest opportunity.

2 Summary of the key proposals

ASSET MANAGEMENT PROPOSALS

The Growth Strategy sets out some high-level aims in relation to asset management, emphasising that the UK government has the following three core objectives:

Ensuring that portfolio management is at the heart of UK policymaking.
Making the UK a world leader for managing private markets assets.
Delivering a future-proofed regulatory regime for asset management.

Unfortunately, the detail in this area is relatively limited, although specific examples of measures that are cited in the Strategy include the ongoing review of the UK AIFMD framework and making long-term asset funds (LTAFs) eligible to be held within stocks and shares ISAs from April 2026. Nonetheless, some of the broader cross-cutting proposals below (e.g. in relation to SMCR or faster regulatory approvals) would also be expected to benefit UK asset managers.

PAYMENT SERVICES AND PAYMENTS INFRASTRUCTURE

The UK government wants the UK to have a world-leading payments sector, underpinned by the UK National Payments Vision. To support this aim, it is proposing to:

Consolidate the Payment Systems Regulator into the FCA (as previously announced earlier in 2025).
Modernise and future-proof the UK regulatory framework for payments and e-money issuance, ensuring that this can also accommodate tokenised payment instruments.
Establish a new model to deliver the "next generation of payment services infrastructure" through the Payments Vision Delivery Committee (PVDC). The PVDC is expected to publish its strategy for retail payments infrastructure in autumn 2025, with a full Payments Forward Plan by the end of the year.
Exploring whether to establish a digital pound as the UK's retail central bank digital currency. This is particularly encouraging in light of the limited references to digital money that were in the earlier National Payments Vision and the FCA's 5-year strategic plan.
Developing a regulatory framework for stablecoins, recognising that their potential to revolutionise retail and cross-border payments and to facilitate wholesale settlement.
Enabling settlement via distributed ledger technology (DLT) in central bank money on private platforms, through the use of omnibus accounts with the Bank of England.
Adding new functionality to the Real Time Gross Settlement (RTGS) service, including by facilitating settlement on a near 24/7 basis and introducing synchronisation which will allow interaction with external ledgers (including those held via DLT). This will open up new possibilities for real-time settlement of transactions.
Continuing work on tokenised settlement instruments, including exploring the use of stablecoins for settlement in the Digital Securities Sandbox.

For further information, see the HM Treasury Policy Paper on the National Payments Vision and the Bank of England Statement on a New Approach to Retail Payments Infrastructure

TECHNOLOGY AND DIGITALISATION OF FINANCIAL MARKETS

The UK government is keen to ensure that UK firms are able to use emerging technologies to ensure that they remain competitive and can continue to innovate as markets evolve. In this area, key proposals include:

Publishing a Wholesale Financial Markets Digital Strategy (WFMDS), which will articulate the UK's vision for digitalising the wholesale markets. The hope is that the move to increasingly digital infrastructure will reduce inefficiencies and costs, as well as support the development of new forms of asset transfer and ownership.
Responding to the Digitisation Taskforce final report to adopt a staged approach to phasing out physical share certificates and introducing a more modern framework for holding shares in the UK and for exercising the rights attaching to them.
Issuing a new remit letter from the Chancellor to the Bank of England's Financial Market Infrastructure Committee, which emphasises the need to facilitate innovation and encourage the development of increasingly digitalised financial services in the UK.

For further information, see the HM Treasury Policy Paper on the Wholesale Financial Markets Digital Strategy and the HM Treasury Digital Instrument (DIGIT) Pilot Update

WHOLESALE MARKETS

The UK government wants to ensure that UK firms which intermediate between businesses and wholesale markets can do so as efficiently as possible. It is therefore proposing to:

Request that the FCA reviews the application of the Consumer Duty to UK firms that are primarily engaged in wholesale activity.
Tailor the UK's regulatory capital framework more appropriately (see "Releasing Capital for Investment" below).
Publish a Wholesale Financial Markets Digital Strategy, containing a vision of how to digitise UK wholesale markets through automation, blockchain or distributed ledger technology, artificial intelligence and the better use of data.
Continue to tailor the UK's regulatory regime to encourage UK competitiveness, including in areas such as the UK Benchmarks Regulation, the UK MiFID regime and UK EMIR.

For further information, see the HM Treasury Policy Note on Updating the UK's Regulatory Framework for Central Counterparties and the associated Draft Statutory Instrument and second Draft Statutory Instrument

REFORM OF THE SENIOR MANAGERS AND CERTIFICATION REGIME (SMCR)

Following the FCA and PRA Discussion Paper and the Treasury's Call for Evidence in 2023 on potential changes to the SMCR, the FCA, the PRA and the Treasury have issued consultation papers containing proposed changes. Some aspects of the SMCR are contained in, or scoped by, statute. For this reason, the changes proposed in the consultations are envisaged to take place in two phases:

Phase 1: This will implement operational efficiencies which the FCA and PRA can effect through changes to their rules, without statutory change. These include:

Streamlining the application process and providing more guidance on what is required, including in relation to overseas candidates.
Some changes to the requirements for criminal record checks (extension of the period of validity to 6 months prior to the submission of the application; and relaxation of the requirements for individuals already performing a senior manager function in the same firm or group). Notably, the requirement for criminal record checks for overseas candidates will remain.
Changes to the 12 week rule, which allow an individual to perform a senior manager function without approval for up to 12 weeks where the absence is temporary or reasonably unforeseen. It is proposed that firms will have 12 weeks to submit an application for a replacement (which in practice will extend the period for which the role can be performed without approval).
Reducing the period for the production of regulatory references under FCA rules to 4 weeks from the date of request.
Providing further guidance on the Conduct Rules.

Phase 2: This will require changes to the statutory framework (which is the subject of the Treasury consultation), following which the FCA and PRA have indicated that they intend to consult on further changes to their rules. These might include:

Removing the current certification regime and replacing it with a "more proportionate" regime.
Reducing the number of senior manager and prescribed functions.
Streamlining other elements of the regime.

All consultations close on 7 October 2025.

We note that there is no mention of extension of the SMCR to cover firms currently outside the regime, such as payment service providers and electronic money issuers, which had been discussed in the past. HM Treasury has now expressly confirmed that it does not plan to apply the SMCR to financial market infrastructure firms at this point in time.

For further information, see the FCA Consultation Paper (CP25/21), the PRA Consultation Paper (CP18/25) and the HM Treasury Consultation Paper on Reforming the Senior Managers & Certification Regime.

UK CAPITAL MARKETS AND PENSIONS

In the Growth Strategy, the UK government notes that successful capital markets are a key part of ensuring the continued competitiveness of the UK's broader financial services sector. To further bolster the competitiveness of those markets, the government is proposing:

Modernising the UK's listing rules so that these are more aligned with international practice and establishing a new Listings Taskforce to support businesses who want to list in the UK.
Finalising the overhaul of the UK's prospectus regime, with the new rules applying from early 2026.
Supporting the launch of the new Private Intermittent Securities and Capital Exchange System (PISCES) regime.
Improving liquidity for UK listed companies by removing rules that restrict how and when trading is permitted.
Reducing costs and red tape for secondary fundraisings by listed companies.
Improving the quality and coverage of investment research by abolishing the rules requiring research unbundling.
Continuing to review the rules applicable to UK capital markets as part of the ongoing Wholesale Markets Review.
Streamlining the UK Corporate Governance Code to make it more proportionate, and reducing accounting and reporting requirements for small companies.
Continuing the reforms under the Pensions Investment Review, which are being implemented through the Pension Schemes Bill. This includes minimum scale requirements for defined contribution (DC) master trust and group personal pension (GPP) default funds and greater investment pooling by Local Government Pension Scheme (England and Wales) funds, as well as the highly controversial (but time limited) "mandation" power to set minimum private market asset allocation percentages for DC master trust and GPP default funds as part of encouraging investment in UK private markets.

For further information, see the FCA Policy Statement on New Rules for the Public Offers and Admissions to Trading Regime (PS25/9) and the FCA Policy Statement on the Final Rules for Public Offer Platforms (PS25/10)

SUSTAINABLE FINANCE

The Growth Strategy emphasises that the UK is committed to acting as a global leader in sustainable finance, but wants to create a stable, streamlined regulatory framework in this area. The UK government is therefore proposing to:

Consult on the UK Sustainability Reporting Standards and assurance of sustainability reporting. This will include a consultation from the FCA on how listed companies will adopt relevant reporting standards.
Consult on how best to take forward the UK government's manifesto commitment to implement the Paris Agreement. This includes considering how best to support UK SMEs to decarbonise their operations while continuing to grow their businesses.
Ensure that the Financial Policy Committee and Prudential Regulation Committee support the UK government's approach to transitioning to net zero.
Support the growth and integrity of the transition finance market and voluntary carbon and nature markets.
Regulate providers of environmental, social and governance ratings.

The government has also confirmed that it will not be proceeding with the development of a UK Green Taxonomy.

For further information, see the HM Treasury UK Green Taxonomy Consultation Response

FASTER REGULATORY AUTHORISATIONS AND APPROVALS

The UK government wants to make it easier for new entrants to do business in the UK and is therefore proposing to:

Shorten the FCA and PRA statutory deadlines in relation to new firm authorisations and variations of permission by 2 months. This means that a complete application must be determined within 4 months (rather than 6) and an incomplete application must be determined within 10 months (instead of 12)
Shorten the FCA and PRA statutory deadlines in relation to approval of senior managers by one month, so that the regulators will have to determine these within 2 months (instead of 3).
Ensure that the FCA and PRA implement more "ambitious targets", committing them to be faster than the statutory deadlines where possible.
Implement a new streamlined authorisation regime for innovative start-up firms, permitting them to carry on limited regulatory activities while being subject to a more limited range of operating conditions (which the government analogises to giving a provisional driving licence or "L-plates" to a firm).

For further information, see the HMT Consultation on Regulatory Environment – Cross Cutting Reforms and the FCA Announcement on Faster Targets for Authorisations

STREAMLINED REGULATORY DECISION-MAKING

The UK government is concerned that the UK's financial services regulators are required to "have regard" to a large number of different factors when taking decisions or adopting policies and wants to simplify and speed up regulatory decision making. Key proposals in this area include:

Reducing the number of issues to which the regulators must "have regard" when taking decisions.
Rationalising the requirements on the regulators to report on their activities and operations.
Requiring the regulators to set out long-term strategies on how they will approach regulation and supervision, taking into account the government objectives set out in the Chancellor's periodic "remit letter".

For further information, see the HMT Consultation on Regulatory Environment – Cross Cutting Reforms

ENCOURAGING RETAIL INVESTMENT

In light of the fact that the UK has the lowest levels of retail investment among any of the G7 economies, the Chancellor is aiming to encourage more retail participation in investments. Key elements of these proposals include:

Facilitating the development of a new "targeted support" regime under which financial institutions will be able to provide generalised recommendations to customers about specific investment opportunities without triggering the current onerous rules governing investment advice.
An industry-led advertising campaign (which some have likened to the famous "Tell Sid" campaign of the 1980s) to emphasise the benefits of investment.
A review of risk warnings on investment products.
Making long-term asset funds (LTAFs) eligible to be held within a stocks and shares ISA from April 2026.

For further information, see the HM Treasury Policy Paper on Targeted Support and the associated Draft Statutory Instrument

RELEASING BANK CAPITAL FOR INVESTMENT

Given the need for substantial amounts of investment in the UK, the Chancellor is proposing to amend elements of the existing UK regulatory capital framework and structural restrictions that currently apply to UK banks. In particular:

The UK will implement the new Basel 3.1 rules "in a way that supports UK competitiveness" from 1 January 2027, except in relation to market risk modelling requirements, which will be implemented from 1 January 2028. This delay is designed to give UK banks more time to plan.
The Bank of England will reform the regime around minimum requirements for own funds and eligible liabilities (MREL), raising the indicative threshold for MREL requirements to apply to total assets of £25 – 40 billion. The Bank published a policy statement providing further details of this to coincide with the Chancellor's announcement of the Leeds Reforms.
The UK ring-fencing regime will be reformed, which may reduce the strict structural separation requirements that currently apply to some large UK deposit-taking banks. The government will review this and report back in early 2026.
The UK Financial Policy Committee will carry out a wider review of UK bank capital requirements to inform further work on ensuring the competitiveness of UK banks.
The PRA will enhance pre-application engagement and support for the development of UK banks' internal models for credit risk. The aim is to address barriers that may be faced by mid-sized firms to developing such models, given that they can increase capital efficiency and therefore facilitate more lending activity.

For further information, see the HMT Policy Update on Applying the FSMA 2000 Model of Regulation to the UK Capital Requirements Regulation and the associated draft Statutory Instrument and Restatement of Definitions, the PRA Consultation Paper on Adjustments to the Market Risk Framework (CP17/25) and the Bank of England Press Release on Measures to Promote Banking Resilience, Capital Certainty, Competition and Growth, which links to connected consultation documents

INSURANCE AND REINSURANCE

The UK has a highly competitive international insurance market, but the UK government wants to build on existing strengths in this sector by reducing the regulatory burden for insurers. Proposals in this area include:

Streamlining the current product governance and fair value frameworks.
Removing unnecessary consumer protections for insurers who serve large or specialist customers.
Introducing a new streamlined approval process for Lloyd's of London managing agents.
Consulting on a more flexible risk transformation regime (including reform of the rules on insurance- linked securities) to allow better access for insurers to funding through the capital markets.
Designing a new tailored regime for captive insurers (including through protected cell companies) to facilitate easier self-insurance and risk management.
Greater promotion of the UK insurance market internationally.

For further information, see the HM Treasury Consultation Response on Captive Insurance and the associated Joint Statement by the FCA and PRA, and the HM Treasury Consultation Paper on Changes to the Risk Transformation Regulations

OVERSEAS FIRMS

The Chancellor's aim to ensure that the UK is a location of choice for international firms who are looking to invest or grow their businesses. Key proposals in this space include:

Implementing Overseas Recognition Regimes, which will set out a harmonised approach to how the UK recognises overseas jurisdictions.
Establishing the Office for Investment (OFI), which will be a concierge service to assist international investors who wish to establish or grow a financial services presence in the UK. The OFI will assist firms in navigating UK regulation and other potential barriers to entry, and will be staffed in part by secondees from the FCA and PRA, as well as the City of London Corporation and wider UK financial services industry.

For further information, see the HM Treasury Guidance Document on Overseas Recognition Regimes.

MODERNISING THE REDRESS SYSTEM

The existing redress structure for financial services complaints will be retained but with some reforms to improve its operations and provide more clarity to firms and consumers. Key proposals include:

An adapted fair and reasonable test so that a firm's conduct will be considered fair and reasonable where it has complied with the relevant FCA rules, in accordance with the FCA's intent for those rules. This is largely to avoid differing approaches being taken by the FCA and the Financial Services Ombudsman (FOS) with the latter effectively acting as a quasi-regulator.
Clarification of the respective roles of the FCA and the FOS including an obligation for the FOS to seek a view from the FCA in cases of ambiguity in how the FCA's rules apply (including at the request of the parties to the complaint). Greater powers for the FCA in respect of potential mass redress events and complaints with wider implications.
An absolute time limit of 10 years to bring complaints to the FOS (subject to exemptions to be determined by the FCA).
Additional circumstances in which a firm should report complaints to the FCA.

For further information, see the FCA's Consultation Paper (CP25/22), the HM Treasury Consultation Paper on the Review of the Financial Ombudsman Service and the FOS Policy Statement on Interest on Compensation Awards

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