From Leeds to Mansion House – Government sets reform timetable for financial sector growth and competitiveness

Where to start? 15 July 2025 without doubt brought the most financial markets-related publications in any single day in 2025, and quite possibly the most in many years. Following on from the previous Government's bold programme of "Edinburgh reforms", announced back in 2022, the present Government's "Leeds reforms" take some of the unfinished business from 2022 and the Chancellor's Mansion House speech from late 2024 and add new initiatives, all in the name of stimulating growth and competitiveness in the sector. The plans are wide-ranging and at varying states of progress. We've picked out some of the main changes.

Why change?

The changes all form part of the Government's 10 year Financial Growth and Competitiveness Strategy, which the Chancellor emphasised in her Mansion House speech delivered on 15 July in the aftermath of the Leeds reforms announcement, and which carries forward the now-common message of regulating not just for risk but also for growth. So its cornerstone is to remove regulatory requirements that have "gone too far" in trying to eliminate risk, and look to ease some regulatory burdens on firms. Added to which it wants to do all it can to continue to encourage innovation and make it easy to do business in the UK. And last but most certainly not least, it wants to encourage consumers into the investment markets. So with all that in mind, it's probably not surprising that a deluge of policy papers, consultations and promises of future action accompanied the Leeds announcement.

Mortgage lending parameters

The Government wants it to be easier for lenders to lend and borrowers to borrow. The Financial Policy Committee had already recommended that lenders could increase their share of lending at high loan-to-income ratios (that is, at ratios of 4.5 or higher), so long as the aggregate flow of lending remains at the previous 15% limit. The PRA and FCA are offering lenders who want to take advantage of this the opportunity to do so immediately using a PRA modification by consent, or FCA individual guidance, while they consult on updates to their rules and guidance. The Government says that should help 36,000 more people buy a home in the next year, and lowering the thresholds at which the Nationwide offers its "Helping Hand" mortgage will allow another 10,000 first-time buyers to use it.

The FCA is already consulting on significant changes to its mortgage rules, also aimed at making it easier particularly for borrowers to remortgage but also generally giving lenders more flexibility, and the Government is also going to introduce a Mortgage Guarantee Scheme to ensure that high loan-to-value mortgages will be available at times of economic uncertainty.

Targeted support and more consumer investment

As well as wanting to make it easier for consumers to get mortgages, the Government is keen to encourage them to take their money out of low-interest savings accounts and instead use the investment markets. It says many consumers with £2,000 to save would likely end up £9,000 better off in 10 years if they put the money in investments rather than in a low-interest cash account. While it has held back on actually abolishing cash ISAs, it still has that under review.

In the meantime, the focus is on industry encouraging the population to invest, both through campaigns that explain the benefits and, from April 2026, the new "targeted support" regime that will allow regulated firms to help investors without entering a full "personal recommendation" relationship. The FCA is already consulting on how this will work and HM Treasury has now published draft legislation to create a new regulated activity.

A new look redress regime

Next up is a reform of the way the Financial Ombudsman Service works. Over recent times, there have been complaints that it is acting like a quasi-regulator and putting its own interpretation on FCA rules. Regulated firms had complained that uncertainty about how the FOS would interpret things was holding back innovation. There will be a new core framework which will formalise the FOS' role and require it to seek the FCA's view (and for the FCA to respond) where it's not clear how FCA rules apply. There will also be a formalised process for the FOS to refer potential wider implications issues or mass redress events to the FCA for it to decide how to address them.

Regulatory authorisations and SMCR reform

Moving on to the authorisation and approval process, there is a plan to reduce (a little bit) the maximum time the PRA and FCA have to determine applications for authorisations, variations of permission and approvals of individuals taking up defined senior manager functions. But more fundamentally, it seems as if the Certification regime (for individuals in key positions that are not senior management functions, and who do not have to be approved by the regulator, but who must be assessed as "fit and proper" by their employer and their names listed on the regulatory "Directory") is finally to be removed, after a commitment made back in the Edinburgh reforms announcement that it would be. It's not yet clear though what may take its place. The main drive at the moment is to amend legislation to remove it, and to give the PRA and FCA powers to put in place whatever regime they think works best. For the time being, the regulators plan to act soon to give more flexibility to firms in terms of making notifications and in respect of the "12 week rule" that allows individuals to take on an SMF temporarily without approval, but which often is not long enough when firms are seeking to replace an individual who has left. Phase 2 will look at potentially reducing the number of functions that are designated functions and further streamline assessment and reporting processes.

A new captive insurance regime

The insurance market will also see change. The Government is taking forward its plans to support a new UK captive insurance market, and the PRA and FCA are to consult next year with a view to bringing in a new regime in 2027. Additionally, the Government is seeking views on how proposed changes to the risk transformation and protected cell companies regimes could support development of a UK captive insurance market.

Easier capital raising for everyone

We've already seen significant moves towards making it easier for unlisted companies to raise capital, with the development of the PISCES platform, and new initiatives will also make it easier for companies to seek additional investment without publishing a new prospectus, and the FCA is creating a new "Public Offers Platform" regime, for regulated firms to operate in a similar way to crowdfunding platforms, but for larger offers.

UK style capital requirements for banks

Meanwhile, banks will see changes to how their capital requirements are expressed. The UK needs to implement Basel 3.1 by January 2027, and in doing so it will take the opportunity to revoke the Capital Requirements Regulation which is in assimilated UK law, so that the key requirements will now appear in PRA rules, in the PRA style. But the Government also wants to take the opportunity to remove unnecessary regulation, change the rules on capital buffers, progress with its regime for banks whose focus is the domestic markets, and delay the introduction of the new internal model approach by a year.

Wholesale market reforms

And finally (for this article, but there are even more reforms than this article has cantered through), there are a swathe of reforms to improve the functioning of the wholesale markets and encourage innovation, including plans to progress digitalisation of the wholesale financial markets, and an update on the Digital Gilt Instrument pilot.

When, how, what else?

The Chancellor delivered a bullish Mansion House speech to follow the Leeds Reform announcement, cutting through the weeds to highlight her key priorities.

We'll be keeping on top of consultations, finalised arrangements and implementation dates, so be sure to keep an eye on FIN and our financial services timeline!