Chancellor Rachel Reeves has unveiled a sweeping package of financial services reforms in Leeds, marking the most extensive overhaul of the sector in more than ten years.
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".
The comprehensive measures aim to stimulate greater investment and provide a significant boost to Britain's economy. The reforms encompass changes to banking regulations, reductions in City bureaucracy, and initiatives to encourage people to shift funds from savings accounts into stock market investments.
These changes are expected to impact individuals, the City, banks and building societies. Here is a full list of the changes set to be implemented by Rachel Reeves. How will you be affected?
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|The Chancellor has unveiled her 'Leeds reforms'
Individuals
For everyday Britons, the Chancellor is set to introduce the following changes:
- A new advertising campaign will showcase the advantages of investing to consumers, with major financial institutions including Barclays, Lloyds, Vanguard and Hargreaves Lansdown participating.
- From April, banks will provide "targeted support" to customers, alerting them to specific investment opportunities. This aims to encourage those with money in low-return current accounts to consider stocks and shares.
- Investment product risk warnings will undergo review to help people make better-informed decisions about risk levels. Long-term asset funds will become eligible for 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".
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GETTY | High street banks will have to work under Rachel Reeves's reforms
Banks and building societies:
For banks and building societies, the Chancellor is set to introduce the following changes:
- Banks and building societies will benefit from relaxed lending regulations, enabling them to offer more mortgages at 4.5 times a buyer's income. This change is anticipated to make thousands of additional loans available to first-time buyers.
- The bank ring-fencing regime, which currently separates retail banking from investment and international banking operations, will undergo reform.
- Furthermore, the Bank of England has increased the threshold for smaller and mid-sized banks to maintain emergency funding.
These relaxed capital requirements are expected to assist smaller banks in expanding their operations by releasing additional funds for lending and investment purposes.
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PA | The City is set to be impacted by the Chancellor's reforms
CIty
For firms operating in the City, the Chancellor is set to implement the following changes:
- The Financial Ombudsman Service, which resolves disputes between consumers and businesses, will undergo modernisation and simplification. Its decisions will become more closely aligned with the financial regulator's approach.
- Rules governing senior manager appointments will be expedited, reducing the number of positions requiring regulatory approval. This regime was established following the 2008 financial crisis to enhance individual accountability for conduct and issues arising under their supervision.
- The Consumer Duty regulations, which establish elevated consumer protection standards, will be reviewed by the UK's financial regulator. The review will examine how these rules apply specifically to investment banks and asset managers.