On the evening of Tuesday 15 March, the UK’s Chancellor of the Exchequer, Rachel Reeves, delivered her annual Mansion House speech. After announcing several reforms, including reducing regulations to encourage more innovation, we look to industry experts to get their reactions.
Following a lot of speculation about what the UK planned to do to bolster economic growth, Reeves delivered her yearly Mansion House speech, setting out the government’s next steps to make the UK the location of choice for financial services firms to set up, invest, grow and sell their services to the world.
“The financial services sector is absolutely critical to my ambitions for our country,” she explained. “It is one of the largest and most successful sectors in the UK, worth around 10 per cent of total economic output and supporting 1.2 million jobs in clusters right around the UK.”
However, in her speech, Reeves warned that “in too many areas, regulation still acts as a boot on the neck of businesses, choking off the enterprise and innovation that is the lifeblood of economic growth.”
In an effort to change this, the Chancellor said she has already “ripped up the planning rules” and “swept away regulations”, alongside publishing a new industrial strategy. To further this initiative, she also announced the new Financial Services Growth and Competitiveness Strategy, which includes the recent Leeds Reforms, which aim to stimulate more investment across the UK.
“These are the most wide-ranging package of reforms to financial services regulation in more than a decade,” she added.
What are the new reforms?
First and foremost, Reeves plans to ensure that regulators are less focused on mitigating risk, and more able to enable innovation, which should help foster economic growth.
“I am introducing new targets for the FCA and PRA to cut times on authorisations and approvals, and I have tasked the FCA with assessing the impact of the Consumer Duty and whether it unduly affects wholesale activity to ensure that regulators are really regulating for growth,” she said.
The Chancellor also proposed introducing a time limit for bringing cases to the Financial Ombudsman Service of 10 years, in a move to speed up the time it takes for consumers to get redress for their complaints; also ensuring that the FOS “no longer acts as a quasi-regulator.”
The government also plans to drive forward developments in blockchain technology, including tokenised securities and stablecoins, and introduce a new design for a digital gilt instrument, to help put UK financial services at the forefront of digital asset innovation.
It is also making changes to capital requirements, enabling UK banks to release more capital for investment into UK infrastructure and businesses. By supporting the Bank of England’s decision to raise the asset threshold for MREL requirements to between £25billion and £40billion, the government hopes to benefit challenger banks and bring increased competition and innovation to the market.
A positive step
Ryta Zasiekina, founder of payment company CONCRYT, welcomes the proposed changes to regulatory oversight and other plans.
“It’s refreshing to see that simplifying regulation, unlocking capital, and accelerating innovation were all priorities in the Mansion House update. The direction of the reforms are essential if the UK is to remain competitive, and they rightly acknowledge the role that modern financial infrastructure will play in the future of financial services.
“These reforms, if implemented well, will help reduce legacy friction and allow financial services firms to better support their growth with seamless, secure, and scalable banking and payment solutions. From faster capital flows to more responsive banking services, it’s important for all stakeholders to ensure that the infrastructure behind these ambitions is as modern as the policy framing them.”
Cautious optimism
Hannah Fitzsimons, CEO of fintech payments company Cashflows, welcomed a number of the reforms, but warned that their impact on SMEs must be considered.
“The proposals to streamline accountability rules for senior bankers, review the ringfencing regime, and ease restrictions on mortgage lending all point to a welcome shift towards a more balanced regulatory approach. The announced changes to the Financial Ombudsman Service are also a positive step in creating a more predictable and fair landscape for financial services providers. These measures signal a clear commitment to fostering a competitive environment where businesses can thrive.
“However, to unlock the UK’s potential as a world-leading ecosystem, this momentum must be maintained and strategically applied to the everyday economy. While the ‘ripple effect’ of these reforms for consumers is a key goal, their direct impact on SMEs must not be overlooked. With SMEs accounting for 60 per cent of private sector employment, their ability to access modern financial tools and credit is paramount.
“We need to see a clear vision that fosters stronger industry involvement and establishes a sustainable commercial model that empowers these businesses. A decisive move away from excessive caution and towards a balanced, pro-growth regulatory framework will be key to ensuring the financial services sector can effectively support the UK’s broader growth mission, with SMEs at its heart.”
Keeping businesses in mind
However, Darren Upson, VP of Europe at fintech unicorn Tipalti, also warns that omitting business support from plans could have dire consequences.
“While Reeves’ Mansion House speech is a step in the right direction – demonstrating a strong commitment to financial regulation and acknowledging the sector’s vital role in national growth – capital alone won’t be enough to pull the UK out of its financial hole. Sustainable growth must be underpinned by robust operational capability.
“To truly support UK businesses, regulatory reform must go hand-in-hand with enabling businesses to manage finance and compliance efficiently as they grow. As the Lord Mayor rightly highlighted, the City’s strength should serve as a launchpad for nationwide opportunity, which means reducing friction not only in capital markets but also in the day-to-day financial operations of ambitious, mid-sized companies.
“In today’s ongoing challenging environment, a modern and pragmatic regulatory framework that’s free from unnecessary complexity is essential to helping businesses scale sustainably. Only then can companies take a breath of fresh air and navigate growth in a less fragmented landscape.”
Too little, too late?
“The Chancellor’s promise to tear up red tape is a welcome first step, but, unfortunately, it comes much too late,” added Sam Hields, partner at early-stage tech VC OpenOcean.
“IPO fundraising in London just hit a 30-year low. If the UK wants to remain competitive, we need urgent, coordinated action that reduces friction for financial services while incentivising investment in high-growth sectors like AI, fintech, and enterprise software. That’s what will define the UK’s economic future and standing as a global leader in the industries of tomorrow.
“The Leeds Reforms will provide some of the clarity needed to unlock long-term investment. But even whispers of a wealth tax send the entirely wrong message to any investor paying attention. The Chancellor can’t expect to drive growth while penalising those best positioned to fuel it. If we want to see the returns, we must appeal to global capital currently looking to invest elsewhere. Otherwise, we risk slipping further into irrelevance as other markets move ahead.”
