Key points from Rachel Reeves's Leeds reforms
The measures include reforming key banking rules, cutting red tape in the City, and getting more people moving cash out of savings and into stocks and shares.
The Chancellor said the 'Leeds reforms', unveiled in the West Yorkshire city, 'represent the widest set of reforms to financial services for more than a decade'.
These are the key points in the package of measures unveiled by the Treasury.
The key measures for individuals:
– A new advertising campaign will highlight the benefits of investing to individual consumers.
Major banks and financial firms including including Barclays, Lloyds, Vanguard and Hargreaves Lansdown have agreed to take part in the campaign to help spread awareness.
– Banks will be able to offer a new type of help called 'targeted support' from April next year.
This means they can alert customers about specific investment opportunities, in hopes it will encourage groups of people with cash sitting in low-return current accounts to move it into stocks and shares.
– Risk warnings on investment products will come under a review to ensure people can make accurate judgements about risk levels – potentially opening the door to some warnings being watered down.
– Long term asset funds will be allowed to be held in stocks and shares Isas next year.
Susannah Streeter, head of money and markets for Hargreaves Lansdown, said the change will 'open up far more investment' because it means cash can go into private assets and infrastructure projects, which currently are not allowed to be in mainstream Isas.
– The Government will continue to consider reforms to Isas and savings to strike the right balance between cash savings and investment.
The key measures for banks and building societies:
– Looser lending rules will allow banks and building societies to offer more mortgages at 4.5 times a buyer's income, which is expected to mean thousands more loans become available for first-time buyers.
– The bank ring-fencing regime, which separates banks' retail banking from their investment and international banking activities, will be reformed.
– The Bank of England has raised the threshold at which smaller and mid-sized banks have to start holding emergency funding.
Easing capital requirements is expected to help smaller banks scale up by freeing up more money for lending and investment.
The key measures for the City:– The UK's Financial Ombudsman Service – which settles complaints between consumers and businesses – will be modernised and simplified and decisions will be more aligned with the financial regulator.
– Plans to ease rules around senior manager appointments will be sped up, reducing the number of roles that are subject to regulatory approval.
The regime was introduced after the 2008 financial crisis to make individuals more accountable for their conduct and any problems that arise under their watch.
– Consumer Duty, a set of rules which set higher standards of consumer protection, will be reviewed by the UK's financial regulator over how it applies to investment banks and asset managers.
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