The Government has launched its Financial Services Growth and Competitiveness strategy, the sector-specific paper to support the broader Industrial Strategy and drive economic development across the UK. Aligning with the Chancellor’s annual Mansion House speech, the Government has also launched the Leeds Reforms to simplify the regulatory landscape and catapult the strategy into action.
Broadly speaking, the collective changes cover three fronts. The first is to reduce regulatory red tape to cut the cost of regulation and reduce risk aversion. The second is to make the UK a more attractive – and crucially, accessible – place for overseas firms to do business. The third is to boost innovation and create jobs, with a sectorial focus on fintechand a geographic focus on growing regional financial services clusters.
These activities play to the strengths of the UK economy, in line with the broader Industrial Strategy (which highlights financial services as one of the eight sectors that are integral to growth). However, the Financial Services Growth and Competitiveness Strategy notes that the sector’s output “has not kept pace with the rest of the economy in the last 15 years”, with a real-world drop of 7% in 2024 vs 2010, and financial services exports dropping from 21% in 2010 to 15% in 2023. The strategic approach aims to tackle this directly and create an environment to foster competition, encourage retail investment and maintain the UK’s position as a global leader of financial services.
Press release
Financial Services Growth and Competitiveness Strategy: Grant Thornton Head of Financial Services response
What are the Leeds Reforms?
The Leeds Reforms aim to reduce the regulatory burden across the financial services sector, remove duplicative rules and increase the pace of change. The key highlights are listed below.
Changes to the Senior Managers and Certification Regime (SM&CR)
Building on work announced in the Edinburgh Reforms in 2022, the Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA), and HM Treasury (HMT) reviewed the effectiveness, proportionality and scope of the SM&CR. This included the FCA/PRA’s joint discussion paper (DP23/3), which explored how to maintain accountability while streamlining the regime.
In the Leeds Reforms, the regulators have published new proposals, detailed across the FCA’s CP25/21, PRA’s CP18/25 and HMT’s SM&CR consultation paper. With an expected 50% reduction in regulatory burden, the work will be rolled out across two phases, with phase one changes aiming to:
- reduce duplicative processes when certifying individuals for multiple senior management functions (SMFs)
- streamline annual fit and proper checks, and extend validity of criminal record checks
- better define some SMF roles
- reduce SMF approval time from three months to two months
- give firms more time to update senior manager responsibilities, submit approvals for temporary or interim SMFs, and update the directory of certified staff.
Phase two changes (subject to legislation), include:
- replace the certification regime with a more proportionate approach (subject to legislation)
- reduce the number of roles that require approval by about 40% for banks and insurers.
The consultations close on 7 October 2025.
Changes to redress and the Financial Ombudsman Service’s remit
The FCA published CP25/22 on modernising the redress system, to boost consumer confidence through greater consistency, predictability and transparency. The government is also reviewing the role of the Financial Ombudsman Service, to reaffirm its role as an impartial dispute resolution service, rather than a quasi-regulator.
Collectively, these measures support early issue resolution, with clearer reporting and escalation guidance for firms. Key changes include:
- changes to the fair and reasonable test to more closely align to FCA regulations
- a ten-year time limit for individuals to refer complaints to the Financial Ombudsman Service
- additional tools to help the FCA oversee mass redress events
- a new referral mechanism for issues that include regulatory uncertainty or with wider implications for the industry.
These changes are particularly timely, given the FCA’s ongoing work into motor finance and any potential subsequent redress scheme. Strengthening the redress system could improve consumer outcomes and turnaround times, enable the industry to leverage data driven approaches to remediation with more certainty and at speed, and provide a greater mechanism to feed lessons learned back to the wider industry.
These consultations close on 8 October 2025.
Reforming the ring-fencing regime
Updating the ring-fencing regime has been on the cards since the Edinburgh Reforms, with work to date including the PRA’s review and consultation on application to third-country subsidiaries and branches. Shifting the focus to unlocking banking capital, HMT is set to review the rules and publish a report by early 2026, covering the following key topics:
- reducing inefficiency in ring-fencing application across banking groups
- enabling ring-fenced banks to offer a wider range of services to UK businesses
- assessing the ability for applying shared resources and services across both sides of the ring-fence.
These changes could create operational efficiencies, reduce the regulatory burden and support innovation through increased flexibility to provide a wider services offering.
Changes to capital markets
Following earlier consultations on corporate bonds, prospectus reform and public offer platforms, the FCA has published two final policy statements PS25/19 and PS25/10 to reduce the cost of capital for businesses and implement the Public Offers and Admissions to Trading Regulations 2024 (POATRs).
Collectively these changes:
- amend the threshold for listed companies to publish a prospectus when raising additional funds, from 20% of existing share capital to 75%
- create a single disclosure standard to reduce the cost of issuing bonds, and allow companies to issue in smaller denominations
- establish a new public offer platform to allow companies to offer bonds or shares above £5 million, without publishing a prospectus.
The new regime comes into effect on 19 January 2026 and sits alongside broader capital market reforms. These include the new Private Intermittent Securities and Capital Exchange System (PISCES), and upcoming work from the FCA on the consolidated tape for bonds, planned changes to transaction reporting and a review of securitisation rules later this year.
It’s also important to note HMT’s newly released policy paper to support the Financial Services Growth and Competitiveness Strategy, covering the Wholesale Financial Markets Digital Strategy and leveraging emerging technology to drive efficiencies across the sector.
Quicker authorisation processes
To make it easier for new firms to enter the financial services market, and adapt their offerings, the Leeds Reforms also sets shorter targets to complete authorisation processes, namely:
- four months for new firm authorisations or changes to permissions (previously six months) for complete applications, or 10 months (previously 12 months) for incomplete applications.
- three months for complete applications (and six months for incomplete applications) for variations of permission that “closely align to the existing business model”
- three months to register or authorise e-money and payments firms for complete applications (10 months for incomplete applications, previously 12 months).
These changes ultimately aim to reduce uncertainty as a key component of the Financial Services Growth and Competitiveness Strategy, and drive innovation by helping firms be more responsive to market needs and innovation.
Reviewing application of Consumer Duty to wholesale firms
Recognising the importance of Consumer Duty, the Government has also asked the FCA to review the framework’s application to asset managers and wholesale firms. While these firms don’t deal directly with the retail market, they are a wider part of the distribution chain and the Government is keen to ensure application is proportionate, and in line with the associated risk to consumers. The report is due by the end of September.
Boosting innovation and job creation
The fintech sector is currently an area of strength for the UK, with the Financial Services Growth and Competitiveness Strategy noting that it “attracted $3.6 billion in investment in 2024 – second only to the US”. However, the Government is keen to consolidate the UK’s position as a leading fintech centre and continue to maximise the benefits from emerging technology.
Existing initiatives to support safe fintech growth includes the , the digital securities sandbox. In addition to the above, the Government is working with the regulators to remove barriers to success and promote growth through:
- a new model to deliver the next generation of UK retail payments infrastructure
- greater access to UK Research and Innovation (UKRI) research and development funding, and additional support from the City of London Corporation and the British Business Bank to help fintech scale ups.
- a dedicated Scale-Up Unit from the PRA and FCA, in addition to their existing New Bank and Insurers Start-ups initiatives
- launching a Smart Data Accelerator from the FCA and moving Open Finance forward, with a joint Government and FCA roadmap to be published by March 2026
- appointing an AI Champion in financial services to focus on driving growth while maintaining good customer outcomes
- encouraging widespread adoption of digital identity processes to improve efficiency for anti-fraud and anti-money laundering (AML) processes.
However, achieving the above will depend on the right investment in people and skills. The Government will achieve this through changes to the visa rules and a Global Talent Taskforce, to attract overseas talent. It has also commissioned a report from the Financial Services Skills Commission (FSSC) to understand and address skills gaps around disruptive technologies, build on findings from the recent Technology Adoption Review and provide more flexible learning opportunities.
In keeping with the wider Industry Strategy, the Financial Services Growth and Competitiveness Strategy takes a regional approach to growth. As such, it looks beyond the key hubs of London, Glasgow and Edinburgh, all in the top 40 most competitive global financial centres, and focuses on key development opportunities across West Yorkshire, Greater Manchester, Cheshire, Norwich and East Norfolk, the West Midlands, Cardiff, and the South of England.
Playing to the existing financial sector strengths of these clusters, with support from the Office for Investment: Financial Services and dedicated skills development from the TechFirst programme, the Government aims to enable these hubs to compete on an international level.
Supporting international growth
With financial services contributing £208.2 billion to the UK economy, totaling 8.8% of total economic output and providing 3.1% of all UK jobs in 2023, the Government recognises the critical role the sector will play in realising UK growth ambitions. This relies on both unlocking the value of new technologies and embracing a simpler regulatory environment to promote financial services as a key international export.
However, the Financial Services Growth and Competitiveness Strategy also aims at attracting international business to the UK and ensuring the market remains accessible and competitive. The Office for Investment: Financial Services, due to open in October, will support that goal with a new concierge service to guide overseas investors through the regulatory journey and reduce barriers to entry. In addition to other measures, it’s also worth noting HMT’s newly published Overseas Recognition Regimes (ORRs) guidance, to support cross border services and reduce friction when delivering financial services internationally.
Maximising growth
While the Leeds Reforms focus on regulatory simplification to streamline operations and reduce the administrative burden, they sit within the broader context of the UK’s Financial Services Growth and Competitiveness Strategy. They are an integral element of it – but by no means the only one. Leveraging emerging technologies, investing in key regional clusters and addressing key skills gaps will be crucial to maintaining and strengthen the UK’s position as a leading global financial centre. Additionally, it will provide a nurturing and attractive environment for overseas investment, with guidance on entering the market and shorter authorisation times for more certainty throughout.
However, success will largely depend on striking the right balance between ensuring financial stability and establishing a risk appetite that is embraced by all stakeholders in order to promote sustainable growth over the longer term. If the sector can achieve that then it will be well placed to support broader growth ambitions across the UK, while ensuring the financial sector continues to lead the way at a domestic and global level.
For further information contact Alex Ellerton.
