Red tape cut and savers supported to invest as Chancellor rewires financial system to boost growth
Leeds Reforms will make the UK the number one destination for financial services businesses by 2035, attracting inward investment and creating good skilled jobs across the UK through the Plan for Change.
Rachel Reeves promises to "double down on the UK's global strengths" as she unveils first-ever Financial Services Growth and Competitiveness sector plan, a key plank of the modern Industrial Strategy.
Working people will be equipped with the support they need to invest and grow their savings, under plans to rewire the financial system to attract investment, create good skilled jobs across the country and put more money into people's pockets.
Banks will send investment opportunities to savers with cash sitting in low-interest accounts for the first time, and major financial institutions - including high street banks - are backing an advertising campaign that will highlight the opportunities of investing for consumers who are able to do so.
Under current trends, moving £2,000 from these accounts to stocks and shares could make millions of people over £9,000 better off in 20 years' time.
The plans to boost people's savings and the economy were unveiled by the Chancellor at a summit of top finance executives in Leeds today as she set out the widest ranging reforms to financial regulation in over a decade - backing one of the key eight growth driving sectors of the future identified in the Government's modern Industrial Strategy published last month.
The Chancellor told executives that, having delivered stability and a sustainable strategy for investment, it was time for the UK to "double down on its global strengths" through reform to make sure it stays ahead in the global race for business investment and the good skilled jobs they bring.
Chancellor of the Exchequer, Rachel Reeves said:
We fixed the public finances and stabilised the economy. Now we need to double down on our global strengths to put the UK ahead in the global race for financial businesses - creating good skilled jobs in every part of the country and helping savers' money go further through our Plan for Change.
Business Secretary, Jonathan Reynolds said:
Financial Services are a UK success story, and one of the eight sectors we identified with the biggest potential for growth in our modern Industrial Strategy.
This sector plan will help make the UK the number one destination for financial services by 2035 and is all about delivering on our Plan for Change to boost the economy and put more money in people's pockets.
Economic Secretary to the Treasury, Emma Reynolds said:
Helping people take advantage of better returns from investing is key to better financial health, giving them a stake in a growing economy and connecting promising businesses with capital. These reforms will make the UK the best location for financial services firms and tear down barriers to investment to growing our economy and making families better off.
The Leeds Reforms tear down the barriers to attracting investment in the finance sector by reintroducing informed risk-taking into the system, cutting unnecessary red tape, driving more finance into public markets and actively helping international companies to set up in the UK.
This will position the UK as the number one destination for financial services companies by 2035, attracting business from around the world to harness the knowledge, talent and expertise in financial services hot spots from Glasgow to Leeds, and help the UK achieve an ambitious target to double the growth rate in UK net exports in these services over the next decade.
Unlocking retail investment
The UK has the lowest level of retail investment among G7 countries, meaning savers are not getting the best bang for their buck and UK businesses are starved of an important source of capital.
Stocks and shares have performed significantly better than cash savings accounts in recent decades. According to some industry estimates, more than 29 million adults across the UK have cash sitting in a low-interest rate account offering around 1% - while the average return for stocks and shares over the last 10 years is around 9%. If those savers invested £2000 today, they could have £12,000 in 20 years' time. This compares to £2,700 if they held this money in a cash account offering 1.5% at the current interest rate, making them over £9,000 better off.
The industry-led ad campaign will help to explain the benefits of investing, and from April 2026 the Financial Conduct Authority will roll out Targeted Support - allowing banks to alert customers about specific investment opportunities to consider shifting money from a low-return current accounts to higher-performing stocks and shares investments.
Alongside a review of risk warnings on investment products to make sure they help people to accurately judge risk levels, this will guide people through a key barrier to investing - getting lost between large number of investment products on offer.
The Government will continue to consider reforms to ISAs and savings to achieve the right balance between cash savings and investment.
As a first step, the Government will allow Long Term Asset Funds to be held in Stocks & Shares ISAs next year, allowing more individuals to invest in assets that will support the UK's future success, like innovative businesses and infrastructure - which can also deliver better returns.
Cutting red tape to attract investment and drive growth
Businesses will be welcomed to the UK with open arms and unnecessary financial red tape that stalls inward investment and slows growth will be drastically cut under the plans.
A new concierge service within the Office for Investment will harness UK networks globally to actively court international financial services companies, creating a one-stop-shop to promote the UK and provide tailored support to help businesses plan where to invest based on their needs - better harnessing specialist clusters across the country from asset management in Edinburgh, to Fintech in Leeds and Cardiff, and insurance in Norwich and Norfolk.
First-time buyers will be supported to get on the housing ladder, with the Bank of England allowing more lending at over 4.5 times a buyer's income - which could help 36,000 more people buy a home over its first year and are helping Nationwide support an additional 10,000 first-time buyers by lowering income thresholds for its popular 'Helping Hand' mortgage from tomorrow. Simplified mortgage lending rules being considered by the Financial Conduct Authority will also make it easier for existing borrowers to remortgage, while the introduction of a permanent government-backed Mortgage Guarantee Scheme will secure the availability of high loan-to-value mortgage products in times of economic uncertainty.
The Financial Ombudsman Service will be returned to its original purpose as a simple, impartial dispute resolution service which quickly and effectively deals with complaints against financial services firms under today's reforms instead of acting as a quasi-regulator, with its decisions more closely aligned to the Financial Conduct Authority's rules. This takes action on a key business complaint about the unpredictable and inconsistent nature of redress action, boosting firms' confidence to invest and innovate.
The Senior Managers and Certification Regime - which was originally intended to address failures in individual accountability and culture that contributed to the 2008 financial crisis - has been implemented in a way that creates unnecessary costs for business. Today's reforms will help deliver a commitment to radically streamline the regime, cutting the burden on firms in half.
The Financial Conduct Authority's Consumer Duty rules were also intended to raise standards in how finance companies treat retail consumers, but today affect the way businesses interact with other businesses - such as investment banks and asset managers. The Financial Conduct Authority will therefore review how the Consumer Duty applies to these wholesale firms.
Freeing capital for investment
Capital will be freed up for banks to invest in the UK.
International banks and investors will benefit from greater certainty as the UK backs Bank of England reforms to raise the MREL threshold - the minimum amount of money and certain types of debt that a bank must have - to £25-40 billion, freeing up billions for lending and investment.
New Basel 3.1 banking rules will be introduced from January 2027 in a way that supports UK competitiveness, with UK-focused lenders given the clarity they need to plan and invest, while the requirements are delayed for the largest firms' investment banking activities to ensure the UK is aligned with how other jurisdictions implement the rules.
The ring-fencing regime - which separates banks' retail and investment banking activities - will be reformed. The Economic Secretary will lead a review looking at how changes can strike the right balance between growth and stability, including protecting consumer deposits.
This comes alongside a major review by the Financial Policy Committee of bank capital requirements. The review will inform work by the Government and Bank of England to ensure UK banks can compete internationally and provide vital investment in the economy whilst maintaining the international regulatory standards which are crucial to securing financial stability.
Promoting innovation and making the UK the Fintech capital of the world
Bespoke support will be provided to firms as they start, scale and list, and a pipeline of skills will support financial services firms to seize tomorrow's opportunities for growth.
Financial business will receive intensive support through the start-up phase, helping them create a proven concept and attract growth funding.
A single regulator point of contact will also help these businesses through the scale-up phase, providing technical support to help understand requirements and speeding up regulator responsiveness.
Businesses will also benefit from better access to finance, with the Government recently uplifting the British Business Bank's financial capacity to £25.6 billion.
The sector will also be supported by a better pipeline of skills, with a new Global Talent Taskforce helping attract top international talent to the UK, funding for 50 PhD students through the £187 million TechFirst programme to align their research with the needs of key players in the sector and a new financial services skills compact led by the Financial Services Skills Commission to ensure skills needs are met.
