Chancellor’s Mansion House speech, Leeds Reforms and key regulatory changes

Insight

18.07.2025

It’s been a very busy time in the world of Financial Services regulation, with the Chancellor unveiling a substantial package of measures aimed at reducing the regulatory burden on firms and driving growth.

We provide a summary of some of the key initiatives below.

Mansion House speech and Leeds Reforms

On 15 July, the Chancellor gave a speech at Mansion House, setting out her vision for the role that the financial services industry can play in driving growth in the UK economy.

In her speech, the Chancellor said that regulation was acting as a "boot on the neck of businesses" and so is looking to rebalance risk in favour of growth. Notably, the Chancellor is looking to reverse a number of regulatory initiatives introduced following the 2008 financial crisis, including:

the certification regime (see our separate briefing here);
capital requirements (see below); and
a Treasury review of the ring-fencing regime, to report back by early 2026, to consider areas including whether ring-fenced banks can share resources and services more flexibly across the ring-fence.

The Chancellor is also looking to encourage savers to invest more, although has decided not to proceed for the moment with trailed changes to the cash ISA limit, reportedly due to concerns raised by parts of industry and consumer groups, and will consider further changes in due course.

In the meantime, the Government has worked with industry on an advertising campaign in which UK consumers will be encouraged to invest rather than leave cash in a low-interest rate account. The Government will also allow Long-Term Asset Funds to be included in stocks and shares ISAs, which has been popular with industry.

On the day of the Mansion House speech, the Treasury set out the "Leeds Reforms", aimed at boosting investment in the UK and reducing red tape. The Bank of England, PRA and FCA also published a range of proposals and final rules relating to the Chancellor’s agenda.

The Financial Services Growth and Competitiveness Strategy

As a key plank of the Leeds reforms, the Chancellor launched the Financial Services Growth and Competitiveness Strategy (the Strategy), providing more details on how the Government plans to achieve the Chancellor’s aim of the UK becoming the pre-eminent financial services centre by 2025. This was further to a call for evidence published in November 2024.

The Strategy has five key areas of focus:

Delivering a competitive regulatory environment, including through reducing regulatory burdens and reforming the Financial Ombudsman Service.
Harnessing the UK’s global leadership in financial services.
Embracing innovation and leveraging the UK’s Fintech leadership.
Building a retail investment culture and delivering prosperity through UK capital markets.
Setting the UK’s financial services sector up with the skills and talent it needs.

This document provides a useful summary of the Government’s regulatory agenda for financial services.

Cross-cutting Regulatory Reforms

In support of the Strategy, the Treasury published a consultation paper: Regulatory Environment – Cross-Cutting Reforms, setting out certain proposals relating to the regulators.

As well as longer term policy aims on which the Treasury is consulting, relating to the regulators’ remit, "have regards" regulatory principles, and strategy changes, the Treasury is also consulting on changes which are likely to have a more immediate impact on firms:

Authorisations timeframes: The Government is proposing to set new statutory deadlines for the PRA and FCA to complete new firm authorisations, variations of permissions, and SMCR approved persons.

Proposal for Statutory Deadlines Source: Financial Services Growth and Competitiveness Strategy: Regulatory Environment - Cross-Cutting Reforms, page 11, see here.

The FCA has further volunteered, in a letter to the Chancellor, to process certain types of applications in even shorter timeframes, including SMCR approved person applications. We have prepared a fuller briefing on the changes to SM&CR regime here.

Consumer Duty: Asset managers and other wholesale firms have raised concerns with the Government that the Consumer Duty should not apply to them as they do not provide products or services to retail consumers. The Chancellor has therefore asked the FCA to report back, by the end of September, on how it proposes to address these concerns. In line with its current work on client categorisation, the FCA will be asked to provide more certainty on the categorisation of professional clients.

Reform of the Financial Ombudsman Service

In potentially the most far-reaching proposal, the Treasury is consulting on substantial reforms to the Financial Ombudsman Service (FOS). The proposed changes follow a review undertaken by Emma Reynolds, the Economic Secretary to the Treasury, which looked at whether the FOS was operating as originally envisaged.

The Government is particularly concerned that in a small number of cases, the FOS has acted like a quasi-regulator. Industry has been particularly unhappy with the way in which the FOS has dealt with motor finance cases, holding firms in certain cases liable for compensation even when they considered they had complied with the FCA rules. There has also been considerable industry concern about professional representatives submitting claims which are poorly evidenced.

The proposed changes are as follows:

To adapt the statutory "fair and reasonable" test which the FOS currently applies to complaints, to clarify that if FCA’s rules applies to the case, and the firm has complied with the relevant rules, then its conduct will be deemed to satisfy the test. The Government is also proposing that the test is amended so that it is clear that it applies to what is fair and reasonable to both parties.
If there is a dispute over the application of the FCA’s rules, the FOS will be required to seek the FCA’s view on its interpretation, to which the FCA will be required to reply within 30 days. In circumstances to be specified by the FCA, a party to a complaint will be able to request that the FOS seek the FCA’s view.
One of the concerns raised as part of the review was how the FOS deals with mass redress events. The Treasury is proposing that the FOS will be obliged to refer cases with potentially wider issues, or mass redress events, to the FCA. The FCA will be able to refer the matter to the courts as a test case if appropriate.
The FOS will be removed from the scope of the ADR Regulations, so that it will be able to dismiss a case if it decides it is not the most appropriate body to deal with the complaint.
The FCA will be given powers to deal with mass redress events more easily, and is consulting on its proposed approach to identifying and investigating potential mass redress events. The Government is also consulting on whether to make it easier for the FCA to introduce a mass redress scheme.
There will be an absolute time limit of 10 years from the date of the conduct that is the subject of the complaint, to minimise the number of historic complaints the FOS has to deal with. The FCA may be given limited flexibility to make an exception to this.

The Government is also consulting on potential wider institutional reforms of the FOS, including whether it should become a subsidiary of the FCA.

The FCA and FOS have separately been seeking input on the redress framework, and have published a separate joint consultation paper CP 25/22 on Modernising the Redress System. In their paper, they set out proposed changes to the FCA Handbook (including DISP) and guidance, with a view to publishing a Policy Statement in the first half of 2026.

The FCA and FOS are consulting on the following proposals:

To update their Memorandum of Understanding, to set out how they will work together more closely as envisaged by the Treasury.
Consider mass redress events against a framework of six proposed criteria, including the number of consumers affected, the level of the redress bill, and the number of FOS complaints.
Amend the procedure for dealing with mass redress events, including allowing firms extra time to send a final response.
Clarify reporting requirements on firms in SUP 15 to provide proposed criteria according to which firms should report systemic or recurring issues.
The FOS to expand its decision frameworks, in order to improve the consistency and predictability of FOS decisions.
The FOS to introduce a "lead complaint" process, if there is a novel or significant issue, under which a firm would apply to the FOS to consider a representative sample of complaints, and while these are being investigated the firm could pause responses to complaints, thereby reducing case fees and providing for a more consistent approach.
There has been wide industry concern about the role of professional representatives in the complaints procedures. As of April this year, professional representatives which submit more than 10 complaints in a year already have to pay a fee. The FOS is proposing to introduce a number of further changes, including a registration fee.

Separately, the FOS published its Policy Statement on its proposals to amend the amount of interest it applies to awards, which will be set at base rate plus 1%.

Payments update

The Payments Vision Delivery Committee (the Committee) was established by the National Payments Vision, which sets out the Government’s ambitions for a world-leading payments ecosystem which drives innovation, supports competition and ensures security. On 15 July, the Committee published an update on implementing the National Payments Vision (the Update). The Update notes that:

The Committee has agreed an innovative new model to deliver the next generation of UK retail payments infrastructure embedding public and private sector collaboration.
UK’s critical role as an operator of existing systems will continue. The new model next-generation infrastructure will be designed and delivered by technical experts across the Bank of England and industry participants.
In the autumn, the Committee will publish its strategy for retail payments infrastructure, establishing key priorities for next-generation infrastructure.
By the end of the year, the Committee will publish the Payments Forward Plan, which will set out a sequenced plan of initiatives across the payments ecosystem including initiatives in both retail and wholesale payments, and the role of digital assets.

End of UK Green Taxonomy

Following its consultation process, the UK Government has decided not to proceed with a UK Green Taxonomy, stating that the proposal "would not be the most effective tool to deliver the green transition and should not be part of [the UK's] sustainable finance framework". The consultation response noted that views were mixed on the value and use cases for a UK Green Taxonomy, with a third of respondents suggesting that other policies would be more impactful.

The UK Green Taxonomy had originally been proposed with the two objectives of channelling capital into sustainable finance and preventing greenwashing. While there has been progress made in other sustainable finance initiatives (eg the UK Sustainability Reporting Standards and the FCA’s Sustainability Disclosure Requirements), it remains to be seen if these would still be as successful without a UK-specific taxonomy framework. One possible option for firms would be to use other internationally recognised frameworks instead (eg the EU Taxonomy), which we are already starting to see for certain UK authorised funds.

Updating the resolution regime: changes to MREL

The Bank of England has been working closely with Government since the collapse and resolution of Silicon Valley Bank to update the resolution framework. Earlier this year, the Government passed the Bank Resolution (Recapitalisation) Act 2025, which amended FSMA to provide for an industry-funded recapitalisation payment mechanism to support the resolution of small banks.

To support this work and the Government’s agenda to reduce the regulatory burden on firms, on 15 July, the Bank published its Policy Statement on Amendments to the Bank of England approach to setting a Minimum Requirement for Own Funds and Eligible Liabilities (MREL), publishing the final policy in relation to setting MREL, further to their consultation, which will apply as of 1 January 2026, aimed at rebalancing the burden on firms. Under the new policy:

The indicative lower threshold beyond which firms are considered too large to be put into modified insolvency has been increased from £15 billion in total assets to £25 billion.
Firms with total assets between this level and £40 billion will be set either a transfer or bail-in preferred resolution strategy.
Bail-in will be the preferred strategy above £40 billion (increased from £25 billion).
The smaller firms subject to transfer only will no longer be required to meet MREL above their minimum capital requirements.

The PRA published three further consultations on increasing the Resolution Assessment Threshold, amending its MREL reporting to reflect the new Bank regime, and revising its MREL disclosure requirements.

Implementation Delay for part of Basel 3.1

On 15 July, the PRA published a consultation on making some changes to its planned implementation of the Basel 3.1 standards. The PRA had already announced in January that it was planning to delay implementation by one year, to 1 January 2027.

The PRA is now further proposing to delay the part of Basel 3.1 relating to the market risk framework, the Fundamental Review of the Trading Book (FRTB), until 1 January 2028. This is due to uncertainty over timings in other jurisdictions, including the EU. No doubt the attitude of the US administration will also have a significant influence on any decision.

Update to the Listing Rules

The Chancellor referred in her speech to PISCES (see our briefing here) and to further updates the Government is making to the wholesale markets regime.

On 15 July 2025, the FCA published Policy Statement - PS 25/9 report setting out the final rules for the Public Offers and Admissions to Trading Regulations 2024 (POATRs), which replace the UK Prospectus Regulation. The rules will come into force on 19 January 2026.

The FCA’s goal is to simplify and enhance the capital-raising framework in the UK, by removing barriers with regards to public offers and retail participation, and by increasing the threshold at which a prospectus is required for a further issuance of transferable securities. The FCA hopes to encourage broader participation in public markets, especially from retail investors, as well as boost competitiveness relative to other global markets.

The rules include the new Prospectus Rules: Admissions to Trading on a Regulated Market (PRM) sourcebook and amendments to the Market Conduct (MAR) rules for multilateral trading facilities operating in private markets, and revisions to the UK Listing Rules.

The FCA also published Policy Statement - PS 25/10, setting out the final rules for the new "public offer platform" (POP) regime, part of the POATRs regime, which will support the new regulated activity of operating a POP. POP operators will be able to allow companies to raise capital by offering securities without publishing a prospectus where those securities will not be offered on a public market.

The new regime will come into force on 19 January 2026, alongside the POATRs.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.