By David Milliken, William Schomberg and Tommy Reggiori Wilkes
LONDON (Reuters) -British finance minister Rachel Reeves will pledge on Tuesday to ease rules for finance firms as she announces a flurry of measures to boost the sector and the broader economy, including a plan to get more savers investing in company shares.
The government confirmed an easing of access to mortgages, reiterated plans to reform bank ring-fencing rules – which banks have lobbied to scrap – and simpler regulatory approvals for smaller financial services companies.
“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,” Reeves said in excerpts of a speech she was due to make at the annual Mansion House dinner.
“Regulators in other sectors must take up the call I make this evening… not to bend to the temptation of excessive caution,” she said.
Financial executives have welcomed Reeves’ previous promises to reduce red tape and encourage risk-taking since Labour came to power last year. But her pitch to the City of London comes with the industry still worried about a stuttering economy and more dynamic financial centres stealing their market share.
Reeves and Prime Minister Keir Starmer have promised voters that they will speed up Britain’s slow economy but after a year in power that ambition has largely eluded them, raising fears that taxes will have to go up to balance the public finances.
Last month, the government announced a 10-year industrial strategy that included the financial services sector.
In a series of measures, Reeves welcomed changes announced by the Bank of England to help banks free up capital, including a delay to the implementation of part of the Basel banking reforms that govern banks’ trading activities until 2028, and an easing in capital requirements for mid-sized lenders.
Karim Haji, global and UK head of financial services at KPMG, said the package was a welcome continuation of the government’s modernisation of UK finance.
“But the critical test will be in their execution and how quickly these proposals can translate into real, measurable benefits for firms, investors, and consumers,” Haji said.
ALERTING CUSTOMERS
From April 2026, the Financial Conduct Authority – a regulator – will allow banks to alert customers about specific investment opportunities so they can consider shifting money from low-return current accounts.
Before then, banks will run an advertising campaign to promote share investments.
Regulators will review the risk warnings given for different types of financial investments.
The finance ministry said Britain had the lowest level of retail investment among the Group of Seven rich countries.
A survey by fund managers Aberdeen showed that Britons invest 8% of their savings in shares or mutual funds compared with 9% in Germany and Japan, although this does not include pension savings which in Britain are often invested in equities.
Reeves considered reducing tax incentives for savers using cash-only Individual Savings Accounts to boost investment in stocks and shares. But such a change could raise financing costs for some lenders. The Treasury said it would continue to consider ISA reforms.
As well as consumers, Reeves has targeted British pension funds as a source of investment that could boost growth.
Other changes announced by the Treasury on Tuesday included requiring the Financial Ombudsman Service to stick more closely to FCA rulings when resolving consumers’ disputes and for the FCA to review how its consumer duty rules are applied in business-to-business disputes.
The Senior Managers and Certification Regime – set up after the 2008 financial crisis to hold personally accountable for misconduct – will be streamlined, the finance ministry said.
The FCA and the Prudential Regulation Authority proposed new rules to support a more effective and competitive captive insurance sector, while the FCA also said it would speed up the process for authorising new companies.
(Additional reporting by Sachin Ravikumar; writing by David Milliken and William Schomberg; Editing by Susan Fenton)
