(2 min read)
On 15 July, HM Treasury announced Leeds Reforms which represent the most comprehensive overhaul of the UK financial system in over a decade, with the aim of making the UK the leading global destination for financial services by 2035. Key initiatives include unlocking retail investment through FCA-led “Targeted Support” and allowing Long Term Asset Funds within ISAs. Reforms will also free up capital for investment by raising the MREL threshold and reviewing the ring-fencing regime, while Basel 3.1 rules will be tailored to support UK competitiveness.
On 15 July, HM Treasury announced Leeds Reforms which represent the most comprehensive overhaul of the UK financial system in over a decade, with the aim of making the UK the leading global destination for financial services by 2035.
A key initiative is the introduction of measures to unlock retail investment, addressing the UK's low levels of investment compared to other G7 nations. Banks will now be able to alert savers with cash in low-interest accounts about higher-return investment opportunities, supported by an industry-led advertising campaign. From April 2026, the Financial Conduct Authority (FCA) will roll out "Targeted Support" to guide savers, alongside reforms to risk warnings on investment products to help individuals better understand potential returns and risks. Additionally, Long Term Asset Funds will be allowed within Stocks & Shares ISAs, enabling savers to invest in innovative businesses and infrastructure projects.
To attract international financial services businesses, the Government announced plans to drastically cut unnecessary red tape and streamline regulatory processes. A new concierge service within the Office for Investment will actively court global firms, offering tailored support and promoting regional financial hubs such as fintech in Leeds, asset management in Edinburgh, and insurance in Norwich. The Financial Ombudsman Service will be reformed to focus on its core role as a dispute resolution service, aligning its decisions more closely with FCA rules to provide greater regulatory clarity. The Senior Managers and Certification Regime will also be streamlined to halve the burden on businesses, while the FCA will assess how its Consumer Duty rules apply to wholesale firms, ensuring they do not unnecessarily impact business-to-business interactions.
Another significant focus of the reforms is freeing up capital for investment. The Bank of England’s reforms to raise the MREL threshold (the minimum resources banks must hold) will release billions for lending and investment, while the introduction of new Basel 3.1 banking rules in 2027 will be implemented in a way that supports UK competitiveness. The ring-fencing regime, which separates retail and investment banking activities, will be reviewed to strike a balance between stability and growth. These measures aim to ensure UK banks remain globally competitive while maintaining financial stability. In addition, a major review of bank capital requirements by the Financial Policy Committee will inform future reforms to support investment in the economy.
The reforms also emphasise innovation and skills development to strengthen the UK’s position as a global financial leader. Bespoke support will be provided to financial start-ups and scale-ups, including a single regulator point of contact to accelerate their growth. The Government has increased the British Business Bank’s financial capacity to £25.6 billion and launched new initiatives, such as the Global Talent Taskforce and funding for 50 PhD students through the TechFirst programme, to address skills gaps. These efforts aim to build a robust pipeline of talent and support the financial services sector in seizing future growth opportunities. Industry leaders have welcomed the Leeds Reforms, recognising their potential to modernise regulation, unlock investment, and drive long-term economic growth across the UK.
