The Leeds Reforms: UK pivots to growth-focused financial regulation - what firms need to know

On 15 July 2025, HM Treasury (HMT) unveiled a major package of reforms — dubbed the “Leeds Reforms” — alongside the Chancellor’s Mansion House speech.

Centred on the new Financial Services Growth and Competitiveness Strategy, these measures mark a strategic shift: from the post-2008 regulatory paradigm focused overwhelmingly on stability, to a framework that explicitly places growth, investment and international competitiveness at its heart.  For financial institutions, asset managers, banks, insurers and intermediaries, these changes signal a recalibration of the UK regulatory environment that could have wide-ranging consequences for governance, capital, products, and supervisory engagement.

Why this matters for your business

A new direction of travel

The UK is embedding growth and competitiveness as formal regulatory objectives — this is more than just political messaging; it is already being hardwired into how regulators set rules and supervise firms.

SMCR shake-up

The planned overhaul of the Senior Managers and Certification Regime (“SMCR”) will impact individual accountability structures, HR certification processes, and possibly even executive recruitment.

Changes to ring-fencing and retail capital flows

This could alter banking relationships, capital availability, and risk appetites across the financial ecosystem.

A more competitive global pitch

As other financial centres vie for capital, the UK is seeking to reassert its attractiveness. Firms should position now for potential opportunities — and regulatory shifts.

A growth and competitiveness strategy for financial services

The Government’s new ambition

The Financial Services Growth and Competitiveness Strategy sets three headline goals for 2035:

• Double net financial services exports — from £63bn to over £120bn.
• Become the world’s top destination to list, raise capital, and manage assets.
• Channel financial services investment into productivity across the UK, not just London.

It is no accident the reforms were branded from Leeds. This signals a push to support regional financial hubs, from fintech clusters in Manchester to asset servicing in Edinburgh.

Practical policy levers

To deliver these objectives, HMT announced:

• A new Financial Services Office for Investment, to coordinate international promotion.
• A dedicated Listings Taskforce, to streamline UK listings and IPOs.
• An expanded push for pension funds and retail investors to deploy more capital into UK growth assets, including potential new “UK Investment ISAs.”

Overhaul of the SMCR: easing burdens, maintaining accountability

What’s changing?

The proposed reforms to the Senior Managers and Certification Regime (“SMCR”) are amongst the most significant regulatory adjustments for individual firms:

• Streamlining the regime:
  Reducing the number of senior management functions and simplifying the scope of who needs approval.
  
  
• Replacing annual certification:
  The current annual fitness & propriety certification (a major administrative process for HR and compliance teams) would be replaced by a less frequent, regulator-led approach — still ensuring accountability but aiming to cut costs and bureaucracy.
  
  
• Enhanced regulatory references & conduct oversight:
  Expected compensating measures to preserve standards.

Why it matters

• HR and governance impact:
  Firms will likely need to revise statements of responsibilities, reporting lines and training protocols.
• Attracting talent:
  Government hopes this will make the UK more attractive to senior executives, countering perceptions that regulatory burdens deter leadership candidates.
• Execution is critical:
  The FCA and PRA will decide how far these changes go in practice — balancing competitiveness with their primary consumer protection and prudential mandates.

Loosening ring-fencing rules for banks

The Chancellor also signalled plans to ease ring-fencing requirements that separate retail banking from investment banking. This follows recommendations from the Skeoch Review.  The Skeoch Review (formally the Independent Review on Ring-Fencing and Proprietary Trading, led by Sir Keith Skeoch) was published in March 2022.  It examined the UK’s bank ring-fencing regime introduced after the financial crisis, recommending targeted reforms to make it more flexible, particularly for banks with limited trading activities, while maintaining protections for depositors.

The rationale

• Free up capital and allow more diversified funding structures for banks without large trading operations.
• Support increased domestic lending and investment.

But with caution

• Post-2008, ring-fencing was designed to protect depositors and isolate risks.
• Easing it may create opportunities for banks — but could also subtly shift systemic risk, which in turn could affect firms’ counterparty risk assessments and market confidence.

Unlocking retail investment and pension capital

The Government wants to channel more domestic savings into UK growth assets. Measures include:

• Promoting Long Term Asset Funds (“LTAFs”) to give retail investors access to illiquid assets like infrastructure and private equity.
• Considering a dedicated “Investment ISA” focused on UK equities.
• Requiring banks to offer and signpost investment products.

Implications for firms

• Opportunities for asset managers and platforms to develop new products or target new investor segments.
• But also heightened consumer protection oversight, especially under the FCA’s Consumer Duty — making suitability assessments and disclosures even more important.

A meaningful competitiveness pivot — or just incremental?

A global race

The UK is not alone. Other jurisdictions — from the EU’s Capital Markets Union to Singapore’s digital asset hubs — are intensifying efforts to win global capital flows. The Leeds Reforms aim to keep London and UK regions in that race.

But impact depends on delivery

Much of the heavy lifting now passes to the FCA and PRA. They have statutory secondary duties to support growth and competitiveness, but these sit beneath core objectives around consumer protection and market integrity.

Key questions:

• Will supervisors show more commercial pragmatism day-to-day?
• How far will they tolerate innovation with manageable risks?
• Will firms see any tangible difference in supervisory culture?

These are questions clients are already asking, and the answer will only emerge as rule changes bed in.

Potential second-order implications

• Counterparty & funding impacts:
  If ring-fencing eases, banks may change funding models, affecting clients’ lending relationships.
• Consumer redress environment:
  More retail participation could see increased complaints or mis-selling risks, requiring robust product governance.
• Board scrutiny:
  Boards will want to see clear demonstrations of how growth objectives are being managed alongside traditional risk and conduct priorities.

What should firms do now?

Map potential impacts on governance & HR

Start scenario planning for SMCR changes — consider where simplifications might arise, but also where accountability structures might need strengthening.

Engage with upcoming consultations

HMT, the FCA and PRA are expected to consult on the detailed SMCR overhaul and retail investment measures over the coming months.

Firms should prepare to submit views, individually or via trade associations.

Review client and product strategies

Asset managers, platforms and advisers should anticipate regulatory encouragement to direct flows into UK growth assets, whilst ensuring compliance with Consumer Duty standards.

Monitor supervisory signals

Look for how FCA/PRA thematic reviews and speeches start to incorporate the competitiveness duty, to spot shifts in supervisory tone.

Keep Board and Audit/Risk Committees informed

Provide briefings that link these reforms to your firm’s risk appetite, growth plans and operational resilience frameworks.

Final thought

The Leeds Reforms signal a genuine pivot: the UK is embedding growth and competitiveness alongside safety and soundness. For firms, this brings both opportunities and new types of regulatory balancing. The next 12-24 months will be crucial as ambition turns into detailed rules, shaping the financial services landscape for the next decade.

How we can help

We are actively advising clients on:

• Preparing for the SMCR changes and regulatory engagement
• Strategic reviews of governance and accountability frameworks
• Scenario planning for shifts in capital markets regulation and product suitability
• Board training sessions on how the new competitiveness objective might affect regulatory interactions

If you’d like to explore what these changes could mean for your business, please get in touch with Charlotte Hill, or your usual contact in our financial services regulatory team.