Biggest financial reforms ‘in a decade' to bring risk-taking back into City
Changes include reforming the bank ring-fencing regime and reducing burdensome regulation in the City in order to reintroduce 'informed risk-taking' into the financial system, the Government said.
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'.
New measures are intended to help drive increased levels of investment among both financial firms and individuals.
The Treasury said the ring-fencing regime – which was brought in after the 2008 financial crisis to separate banks' retail and investment banking activities – will be reformed.
Economic Secretary Emma Reynolds will lead a review into how changes can strike the right balance between growth and stability, including protecting consumers' deposits, it said.
Britain is a global outlier in enforcing ring-fencing, and major banks have been divided over whether the system is necessary to protect savers or is overly burdensome.
The Treasury said it was backing regulatory reforms for mid-sized banks to free up money for lending and investment.
Furthermore, the plans include cutting layers of red tape for businesses in the City.
This will see the UK's Financial Ombudsman Service – which settles complaints between consumers and businesses – watered down and simplified to address backlogs in the system.
It will also speed up changes to the senior managers regime, which was also brought in after the 2008 crisis to vet individuals before they are appointed and hold them accountable for problems and risk-taking.
Cuts to City red tape sit alongside efforts to boost the level of investment among individuals.
This includes rolling out 'targeted support' from April next year, whereby banks can alert customers with cash sitting in low-return current accounts about investment opportunities.
Major banks and financial firms including Barclays, Lloyds, Vanguard and Hargreaves Lansdown are backing a new advertising campaign highlighting the benefits of investing.
The Government also said it will continue to consider reforms to ISAs and savings to strike the right balance between cash savings and investment.
'We are fundamentally reforming the regulatory system, freeing up firms to take risks and to drive growth,' Ms Reeves told finance chiefs when setting out the reforms in Leeds.
The 'much-needed' measures are intended to 'really invigorate our financial services sector, but with the core purpose of therefore reinvigorating the whole economy,' she said.
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