Reeves sets out sweeping reforms to financial sector in search for growth
Chancellor Rachel Reeves sits alongside Economic Secretary to the Treasury Emma Reynolds during a roundtable discussion with top finance executives at Lloyds Banking Group's offices in Leeds (Oli Scarff/PA)
The plans include measures to make it easier for first-time buyers to get on the housing ladder with increased levels of borrowing and efforts to support new financial technology – fintech – firms grow in the UK.
The Chancellor said: 'We are fundamentally reforming the regulatory system, freeing up firms to take risks and to drive growth.
'Second, we're providing certainty for banks operating in the UK, and ensuring that UK banks have the ability to compete internationally and drive economic growth.
'Third, we're doubling down on making the UK an innovation capital and the place of choice for fintechs to start up, to scale up and to list in the UK.
'Fourth, we're seizing opportunities in areas where we are already world leading, including asset management, sustainable finance and specialty insurance.
'And fifth, we are delivering prosperity by increasing the firepower of our capital markets and boosting retail investment.'
She said the 'Leeds reforms' are intended to 'really invigorate our financial services sector, but with the core purpose of therefore reinvigorating the whole economy'.
Chancellor Rachel Reeves (centre) with Lloyds Banking Group chief executive Charlie Nunn (top of table, left) and Economic Secretary to the Treasury Emma Reynolds (top of table, right) at Lloyds Banking Group's offices in Leeds (Oli Scarff/PA)
Ms Reeves said the financial services industry accounted for 9% of gross domestic product – a measure of the size of the economy – and was 'a big source of tax revenue' for the Treasury.
More mortgages will be available at more than 4.5 times a buyer's income following recent Bank of England recommendations that some lenders can offer more high loan-to-income mortgages if they choose to.
This will create up to 36,000 additional mortgages for first-time buyers over the first year, the Government said.
Britain's biggest building society – Nationwide – announced last week that it is aiming to increase its high loan-to-income lending limit.
From Wednesday, eligible first-time buyers can apply for Nationwide's Helping Hand mortgage with a £30,000 salary, down from £35,000, and joint applicants with a £50,000 combined salary – down from £55,000.
It is estimated this will support an additional 10,000 first-time buyers each year.
The changes will sit alongside the creation of a permanent mortgage guarantee scheme, delivering on a manifesto commitment, and a review of Financial Conduct Authority (FCA) lending rules that could allow prospective buyers' records of paying rent on time to be used to show they can afford mortgage repayments.
Further details of Ms Reeves' plans will be set out in her Mansion House speech in the City of London on Tuesday night.
Chancellor Rachel Reeves and Economic Secretary to the Treasury Emma Reynolds look from a window at Lloyds Banking Group's offices in Leeds (Oli Scarff/PA)
She is expected to say: 'I welcome the recent changes the (Bank of England) Financial Policy Committee has announced to the loan-to-income limit on mortgage lending, which the PRA (Prudential Regulation Authority) and FCA are implementing immediately.
'With an instant impact for consumers, such as Nationwide offering its Helping Hand mortgage to more first-time buyers – supporting an additional 10,000 each year.'
The Chancellor is expected to add: 'Today, I have placed financial services at the heart of the Government's growth mission.
'Recognising that Britain cannot succeed and meet its growth ambitions without a financial services sector that is fighting fit and thriving.
'And I have been clear on the benefits that that will drive.
'With a ripple effect that will drive investment in all sectors of our economy and put pounds in the pockets of working people.'
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The Guardian
29 minutes ago
- The Guardian
Tread carefully with reform of bank ringfencing, chancellor
Rachel Reeves called it 'the biggest set of reforms to financial regulation in a decade', and, in one narrow sense, her Leeds Reforms would qualify for the description. If the ringfencing regime for banks were to be scrapped, we really would be entering a new era – or going back to an old one, since the separation of banks' retail and investment banking activities was the single biggest regulatory change introduced after the 2008-09 crash to try to prevent another blow-up. Reeves on Tuesday, however, merely announced a review to look at how reforms to ringfencing could 'strike the right balance between growth and stability, including protecting consumer deposits'. One hopes that does not mean outright abolition, which is what banks such as HSBC, Lloyds and NatWest have been urging on the grounds that the rules trap capital and impede growth. The stout defence of ringfencing from Andrew Bailey, governor of the Bank of England, has always felt more compelling: the regime has made banks safer and removal would increase the cost of loans and mortgages. It would surely be hard for a chancellor to override the Bank on this core question, especially when Barclays – which, in theory, might have most to gain from abolition as it has the largest investment bank – is also in the defence camp. A fudged outcome would see more activities allowed within the ringfenced entity. It is technical stuff, but also deeply important. Get it wrong and the cautious voices sounding the alarm over a government in search of a sugar-rush of growth via financial deregulation would have a point. Tread carefully, chancellor: ditching ringfencing in its entirety risks unlearning the lessons of the last crisis. In other respects, however, Reeves's red tape-slashing, investment-boosting, obstacle-removing reforms can be criticised in the other direction: yes, some changes are sensible tidying-up exercises but others are underwhelming. Take the showbiz headliner: the advertising campaign to encourage over-cautious savers to push a few quid into the stock market. The goal is admirable in itself for the reasons the Treasury gives: savers are doing themselves long-term financial harm if they do not understand that shares beat cash over most long-term periods. • Looser mortgage rules, which allow lenders to provide bigger mortgages worth more than 4.5 times borrowers' annual income. The move could help another 36,000 first-time buyers per year, according to the Bank of England • A permanent government-backed mortgage guarantee scheme, in which taxpayers will pick up the bill when a borrower defaults, in an effort to encourage participating banks to offer more 91-95% mortgages • A government-backed but industry-funded advertising campaign to encourage consumers to invest their cash savings in shares • Plans to allow banks to send information about 'investment opportunities' to savers that have cash sitting in low interest rate accounts, encouraging them to shift money to stocks and shares • A fresh review of ringfencing rules which were introduced after the 2008 financial crisis in order to protect consumer cash from a bank's riskier activities • A review of warnings attached to investment products to ensure that people are 'accurately' judging risk levels • Plans to 'radically streamline' accountability rules for senior bankers and finance bosses • Reining in the powers of the Financial Ombudsman Service, which settles complaints between consumers and businesses • Cutting the rate of interest – and therefore total compensation – paid out to consumers wronged by City firms and imposing a 10-year limit for claims • A new 'concierge service' to court international investors and create a one-stop-shop to promote the UK and provide tailored support to help businesses plan where to invest. But it's not as if the Treasury itself is doing much more than cheering from the wings. The ad campaign will be funded by the industry, which presumably could have launched the thing itself without government endorsement. At the very least, Reeves could have given the volunteers a hand by abolishing stamp duty on shares for purchases within ISAs. Even that gentle step was conspicuous by its absence. Tweaking risk-warning messaging may help at the margins. So will better access for retail investors to corporate debt and corporate fund-raising, as announced by the Financial Conduct Authority (FCA). But if Reeves is truly alarmed (as she should be) by the statistic that the UK has the lowest level of retail investment in the G7 group of rich economies, bolder measures are needed. It could take a generation to change saving habits to encourage 'informed risk-taking' but the crisis in the London stock market is happening now. Stamp duty remains the drag in the background, and is the real test of the Treasury's seriousness. Elsewhere, several reforms look justified: help for 'challenger' banks on capital rules; some loosening of rules to help first-time buyers; a trimming of the size of the authorisation regime for bank senior managers in the interest of efficiency; changes to allow the London Stock Exchange to quote dollar- and euro-denominated shares. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion A third pot of policies are straightforward lobbying victories for the City. That lot includes the neutering of the financial ombudsman service, but the banks may have had a point about the body acting as a 'quasi regulator' within the FCA. The timing of the reform looks terrible while the unresolved car finance affair rumbles on, but the regulatory setup did look basically confused. The onus now falls on the FCA to act sooner to spot looming scandals, which is not a wholly reassuring thought. But let's not overstate the significance of the Mansion House speech. Yes, the financial services industry deserves its place as one of the eight growth-driving sectors within the government's overall industry strategy; it's too big to ignore. But, despite some of the rhetoric, it's not as if the City is currently being strangled by regulation in the way that purer industrial sectors are being hampered by high energy costs. So don't go overboard on ringfencing reform: it is the bit that matters the most.
Leader Live
31 minutes ago
- Leader Live
Britain cannot grow without ‘fighting fit' finance sector, Rachel Reeves says
Ms Reeves, delivering her annual Mansion House speech to the financial services sector, said changes were needed for the UK to stay competitive in a more uncertain global economy. 'Today, I have placed financial services at the heart of the Government's growth mission, recognising that Britain cannot succeed and meet its growth ambitions without a financial services sector that is fighting fit and thriving,' she told the attendees. She said the Government was delivering on its pledge, made at last year's Mansion House speech, to 'regulate for growth and not just for risk'. The Treasury announced a package of reforms on Tuesday aimed at attracting more investment to the UK, and among individual consumers, to help grow the economy. Ms Reeves said this involves 'rolling back regulation that has gone too far in seeking to eliminate risk', with plans to cut red tape in the City and reform banking rules including the ring-fencing regime. The UK is currently an outlier in forcing banks to separate their retail and investment banking activities, so reforms are hoped to make Britain more competitive globally. Ms Reeves also highlighted efforts to boost retail investment which she said is currently presented 'in a negative light, quick to warn people of the risks without giving proper weight to the benefits'. Plans include potentially changing the language of risk warnings on investment products to encourage more people, particularly women, to take the leap. The Leeds Reforms – named after one of our financial services' hubs and a city I'm proud to represent – will deliver the biggest package of reforms to financial services regulation in a decade. Kickstarting economic growth and putting more pounds in people's pockets. — Rachel Reeves (@RachelReevesMP) July 15, 2025 Furthermore, the Chancellor said new powers to mandate pension funds to invest in UK assets were 'sending a clear signal' that the Government and industry want to deliver higher returns for savers and more investment for the economy. 'But I am confident that I will not need to use that power because firms see the urgency and importance of this as clearly as I do,' she said. The 'Leeds reforms', unveiled in the West Yorkshire city, are set to be the biggest set of reforms to financial services for more than a decade, according to the Government. But the Chancellor concluded her speech by saying: 'As I look ahead, it is clear that we must do more. '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 growth. 'Regulators in other sectors must take up the call I make this evening not to bend to the temptation of excessive caution but to boldly regulate for growth in the service of prosperity across our country.'
Glasgow Times
31 minutes ago
- Glasgow Times
Britain cannot grow without ‘fighting fit' finance sector, Rachel Reeves says
Ms Reeves, delivering her annual Mansion House speech to the financial services sector, said changes were needed for the UK to stay competitive in a more uncertain global economy. 'Today, I have placed financial services at the heart of the Government's growth mission, recognising that Britain cannot succeed and meet its growth ambitions without a financial services sector that is fighting fit and thriving,' she told the attendees. She said the Government was delivering on its pledge, made at last year's Mansion House speech, to 'regulate for growth and not just for risk'. The Treasury announced a package of reforms on Tuesday aimed at attracting more investment to the UK, and among individual consumers, to help grow the economy. Ms Reeves said this involves 'rolling back regulation that has gone too far in seeking to eliminate risk', with plans to cut red tape in the City and reform banking rules including the ring-fencing regime. The UK is currently an outlier in forcing banks to separate their retail and investment banking activities, so reforms are hoped to make Britain more competitive globally. Ms Reeves also highlighted efforts to boost retail investment which she said is currently presented 'in a negative light, quick to warn people of the risks without giving proper weight to the benefits'. Plans include potentially changing the language of risk warnings on investment products to encourage more people, particularly women, to take the leap. The Leeds Reforms – named after one of our financial services' hubs and a city I'm proud to represent – will deliver the biggest package of reforms to financial services regulation in a decade. Kickstarting economic growth and putting more pounds in people's pockets. — Rachel Reeves (@RachelReevesMP) July 15, 2025 Furthermore, the Chancellor said new powers to mandate pension funds to invest in UK assets were 'sending a clear signal' that the Government and industry want to deliver higher returns for savers and more investment for the economy. 'But I am confident that I will not need to use that power because firms see the urgency and importance of this as clearly as I do,' she said. The 'Leeds reforms', unveiled in the West Yorkshire city, are set to be the biggest set of reforms to financial services for more than a decade, according to the Government. But the Chancellor concluded her speech by saying: 'As I look ahead, it is clear that we must do more. '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 growth. 'Regulators in other sectors must take up the call I make this evening not to bend to the temptation of excessive caution but to boldly regulate for growth in the service of prosperity across our country.'
