By William Schomberg, Tommy Reggiori Wilkes and David Milliken
LONDON (Reuters) -British finance minister Rachel Reeves pledged on Tuesday to ease more rules for finance firms as she announced a flurry of measures to boost the sector and the broader economy, including a plan to get more savers investing in company shares.
In the government’s latest bid to boost lacklustre growth, Reeves confirmed an easing of access to mortgages, promised “meaningful reform” of bank ring-fencing rules – which some lenders 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 told London’s financial industry 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 – including at her last Mansion House speech – 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 worried about a stuttering economy and rival financial centres stealing market share.
Reeves and Prime Minister Keir Starmer have promised voters that they will speed up Britain’s 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.
The government last month announced a 10-year industrial strategy that included the financial services sector.
On Tuesday, 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, and an easing in capital requirements for mid-sized lenders.
Barclays CEO, C.S. Venkatakrishnan, said Reeves’ regulatory changes would support UK financial sector competitiveness and its international appeal.
“We applaud the underlying ambition and initiative, even as we wish greater change in some areas, like bank capitalisation, in order to boost support for the real economy, and much less in others, like UK ring-fencing, which is a core of depositor protection,” he said.
Karim Haji, global and UK head of financial services at KPMG, said the critical test for the reforms “will be in their execution and how quickly these proposals can translate into real, measurable benefits for firms, investors, and consumers.”
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 financial investments.
The finance ministry says Britain has the lowest level of retail investment among the Group of Seven rich countries.
The government stopped short of reducing tax incentives for savers using cash-only Individual Savings Accounts to aid investment in shares, but Reeves said she would consider further changes.
As well as consumers, the finance minister has targeted British pension funds as a source of investment.
Reeves said she was “confident” she would not need to use new powers to force pension funds to invest in a wider range of assets, although the new pension bill reserves that right.
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.
Prospectus requirements for listing companies issuing new shares will also be scrapped.
The FCA and the Prudential Regulation Authority also proposed new rules to support a more effective and competitive captive insurance sector, while the FCA 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 and David Gregorio)
