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Long term competitiveness

Our Mansion House summary

16 July 2025

Introduction

The Chancellor announced a series of reforms at a summit in Leeds ahead of her Mansion House speech. The ‘Leeds Reforms’ aim to make the UK the number one destination for financial services businesses by 2035. This aim is backed up by the government’s Financial Services Growth and Competitiveness Strategy – the financial services sector plan of the Industrial Strategy – which sets out five key areas of focus and underscores the sector’s contribution across the economy. Our analysis and response to the Strategy are structured around those key themes:

  1. Delivering a competitive regulatory environment.
  2. Harnessing the UK’s global leadership in financial services.   
  3. Embracing innovation and leveraging the UK’s FinTech leadership. 
  4. Building a retail investment culture and delivering prosperity through UK capital markets. 
  5. Realising the economic potential of financial services clusters. 

The Chancellor’s Mansion House speech summarised key elements of the Strategy. She highlighted the critical role financial services have to play in achieving the government’s growth ambitions, and that there must be a willingness to change how things are done for the UK to stay ahead in a highly competitive and uncertain global environment.  

The Chancellor explicitly called out a critical issue on risk that we have long been pressing with politicians, regulators and officials for the past two years: that UK regulation has gone too far in seeking to eliminate risk – undermining investment, enterprise, innovation and growth – and that regulation must now be rebalanced to support growth. She urged regulators to “boldly regulate for growth”.  The Chancellor underscored this in her Financial Times editorial, saying that this culture of risk aversion is not seen in any of our competitors, and noting that it is bad for business, for growth and for working people.  

The Strategy includes a focus on many of the other key policy themes that we have been actively shaping and pursuing through our engagement with government, parliamentarians, regulators and other stakeholders. For example, we urged HM Treasury and the regulators to streamline the Senior Managers and Certification Regime (SM&CR) for both domestic and international candidates. We will respond to the consultation, which aims to reduce the regulatory burdens of the SM&CR by 50%. 

The government committed to an associated package of consultations and legislation to deliver the Strategy’s ambitions. They also set out a measurement framework based on key economic indicators and culminating in its 10-year aim to double the average growth rate of net exports in financial services compared to the last decade. 

Given the critical juncture and the breadth of activities set out, the pace of implementation is key. We will continue to work closely with members, government and regulators to support the successful execution of these ambitions, influencing prioritisation and detailed design, to ensure the UK continues to be a world-class international financial centre. 

Read more about each key area of focus below:

Delivering a competitive regulatory environment

We have consistently been clear that regulatory uncertainty and the unpredictability of redress requirements are disincentives to investment in UK-based firms and undermine the UK’s competitiveness. We believe predictability, proportionality (including compared to international peers) and being more pro-innovation are core features of an internationally competitive regulatory framework. The Strategy recognises the strength of our feedback on these elements. Reflecting our concerns about the cost and complexity of doing business in the UK, the Chancellor wrote in the Financial Times that “no other globally competitive financial services hub places such relentless bureaucracy on its businesses and nor should we.”   

Measures to address these concerns include a consultation on reforming the redress system and the Financial Ombudsman Scheme (FOS) to ensure that the FOS focuses more on individual disputes and less on the interpretation of precedent-setting regulatory matters as well as ensuring there is no retrospective application by the FOS of contemporary FCA rules; streamlining the SM&CR; and providing greater certainty on the application of the Consumer Duty to wholesale firms. 

We have worked closely with HM Treasury and regulators on reforms needed to reduce frictions and costs for firms when hiring senior talent, so we are pleased to see the government consulting on removing the SM&CR requirement for pre-approval for some roles. This will help address concerns about the UK being an international outlier and reduce the time it takes to appoint senior candidates from within the UK and particularly other jurisdictions. It is important that the regulators also adopt a more flexible approach to how they define Senior Management Functions. 

These measures, along with a continued focus on bolstering the operational effectiveness of the financial regulators, are positive steps and reflect key asks we have made on behalf of the industry.  

There is also clear recognition of the need to consider reforms to prudential regulation, including the capital framework for banks through proposals on minimum requirements for own funds and eligible liabilities (MREL), the UK’s approach to implementing Basel 3.1, and a proposed review of the ring-fencing regime. These steps can positively impact the industry’s ability to invest in growth-driving companies and infrastructure. Further action on prudential regulation in other areas, for example, insurance and pensions firms, would be welcome.  

We welcome the government's commitment to streamline the Alternative Investment Fund Managers Regulations, having called for a proportionate regime. We will continue to inform the details of the reforms. 

Our International Strategy underlined the opportunity to position the UK as a world leader in risk management and risk advisory services. It’s therefore positive to see the Strategy set out how the government will bolster UK strengths in insurance and reinsurance, including clearly delineating between retail and wholesale business, a theme the government rightly recognises must be addressed in other sectors. A focus on emerging and specialised risks, for example, climate and cyber risks, recognises their importance globally and to growth markets in Asia, the Middle East and Africa. The Strategy also announced the government’s intention to deliver a new, tailored regime for captive insurance. The FCA plans to consult on the regulatory framework in summer 2026.  

Sustainable finance is one of our five strategic priorities, so we are pleased to see the Strategy reaffirm the government's ambition to maintain the UK's position as a global leader in sustainable finance, and recognise sustainable finance as one of the five priority growth opportunities for the UK.  

In line with our ask through the International Regulatory Strategy Group (our joint venture with the City of London Corporation), the government’s decision not to proceed with a UK green taxonomy is welcome, having concluded that it wouldn’t be the most effective tool to deliver the green transition. We have been calling for the government to prioritise other measures that would create the enabling conditions for the transition in the real economy and facilitate an increase in sustainable investment. In particular, the response highlights our key message that other policies are a higher priority and would be more impactful. 

Harnessing the UK’s global leadership in financial services

The Strategy’s emphasis on UK openness, increasing attractiveness to global firms and the growth opportunity presented by increasing trade and investment are a welcome statement of principles. The Strategy sets out four areas of focus that strongly reflect our international priorities and engagement with the government and other stakeholders.

1. International partnerships

  • Our Swiss Market Advisory Group (MAG) has been central to the development and delivery of the Berne Agreement – we welcome the government’s commitment to implement the Agreement by the end of 2025.
  • We have sought to put financial services on the government’s agenda for the UK-EU reset, so it is positive to see the government’s commitment to working with the EU to deliver mutual benefits on financial services.
  • The UK-US Economic Prosperity Deal’s commitment to increase digital trade, including financial services, presents an opportunity to deepen the relationship. We are working with the government to realise this ambition over the coming months

2. UK attractiveness

  • We have worked closely with the government – including the Office for Investment - on how to attract foreign direct investment to the UK and have called for a ‘single window’ to enable global investors to more easily navigate the hurdles to UK investment. We therefore welcome the planned concierge service for financial services and the commitment that government, regulators and the City of London Corporation will harness industry expertise to increase investment in the UK.
  • HM Treasury’s new Overseas Recognition Regimes will replace the EU-inherited ‘equivalence’ regime with an outcomes-based approach rather than a line-by-line test. We support this flexible approach, which will support the UK’s connections to key markets.

3. Positioning the UK and the industry to capture the opportunities of the future 

  • With geopolitical risks increasing, the Strategy highlights the role the industry can play in providing finance and investment for defence companies. We will work with the new Defence Investors’ Advisory Group to address the issues highlighted in our recent report with ADS Group, ‘Finance and Investment for UK Defence’. 
  • In line with our calls, the commitments to supporting blended finance solutions and voluntary nature and carbon markets are positive, as is the government’s commitment to working with the private sector to mobilise climate finance to emerging markets and developing economies (EMDEs), including through the new Investor Taskforce. 

4. Shaping global standards 

  • The UK has a major stake in the global financial system. We will work with members to ensure we play a key role in supporting the government’s commitment to shaping international financial regulatory standards to support global financial stability, reduce regulatory arbitrage and provide a cohesive global regulatory landscape.
Embracing innovation and leveraging the UK’s Fintech leadership

Several new initiatives were announced to foster innovation across our industry and support the future success of UK FinTechs. The new FCA and PRA Scale-Up Unit reflects our calls for a more supportive environment for FinTechs to grow in the UK, and closely links to our wider capital markets work to bolster the UK’s growth markets.  

We also urged HM Treasury to explore initiatives to support smart data and Open Finance, so we welcome the announcement of an FCA Smart Data Accelerator to test smart data applications and solutions. We will help shape regulatory policy for Open Finance, a potential growth area for the UK.  

As announced in the AI Opportunities Action Plan, the government will establish a financial services AI Champion to support industry AI adoption. This role must support collaboration between policymakers and our industry to ensure a pro-innovation and proportionate approach to regulation. The transformative potential of these technologies for our industry is huge, so we are pleased the government has acknowledged this in the Strategy. Greater progress on the payments ecosystem is necessary, including the regulatory framework for stablecoin, exploration of a digital pound and advancing work on tokenised settlement instruments.

Building a retail investment culture and delivering prosperity through UK capital markets

We welcome the rolling out of targeted support for consumers by 2026, which is a crucial component for making investing simpler and more accessible for individuals across the UK. We will respond to the FCA consultation and HM Treasury’s draft statutory instrument. 

The government’s commitment to support an industry-led campaign promoting the benefits of retail investment to consumers is a positive sign of its commitment to growing retail investment. The government should now back a ‘collective stocktake’, an annual cross-sector review of progress against clear retail participation targets, and key performance indicators for the campaign and wider reforms needed to boost retail investment.  

Our Retail Investment Group is developing a report to be published in Q4 2025, which will set out the importance of a national strategy to boost retail investment, as well as success measures. We welcome the government’s commitment to supporting a shift in regulation to ‘informing’ rather than ‘warning’ consumers about the benefits and risks of investing. We are working with members on this important issue and will address it in our forthcoming report.  

The final rules to overhaul the UK’s Prospectus Regime will enhance the UK’s capital markets and improve retail investors' access to them. We will work with members to ensure investors continue to get high-quality information.  

It’s positive to see the government’s commitment to its ongoing programme of reforms to wholesale markets, including a tailor-made regulatory approach to support UK capital markets. The FCA will publish an engagement paper on potential reforms to the market risk framework for the Investment Firms’ Prudential Regime (IFPR) by the end of the year and launch a consultation in 2026. 

The government also committed to establish a listings taskforce alongside the Office for Investment. We have been calling for reforms to support companies starting, scaling and growing in the UK, so we welcome the government’s ongoing focus in this area. We will explore opportunities to work with the taskforce to ensure its work aligns with other initiatives. HM Treasury also restated its commitment to delivering the Private Intermittent Securities and Capital Exchange System (PISCES) and Pensions Investment Review reforms, which we have consistently called for. 

Alongside the Financial Services Growth and Competitiveness Strategy, HM Treasury published a  Wholesale Financial Markets Digital Strategy (WFMDS), which sets out a vision for digitalising UK wholesale markets. This is a priority for us, and the WFMDS reflects many of the themes we raised in our report on the digitalisation of UK capital markets, both in its focus on unlocking the potential of distributed ledger technology and steps towards more specific interventions, such as further regulatory support for stablecoins as a settlement option. 

We have long called for HM Treasury to progress the Digitisation Taskforce. The establishment of a technical group echoes our recommendation for an implementation steering group to support the delivery of the final recommendations. 

Realising the economic potential of financial services clusters

The Strategy recognises the important role that industry clusters play in the UK’s wider offer, as well as practical drivers such as infrastructure investment and planning reform, for which we have long advocated. We continue to work with devolved leaders to reinforce the vital role of financial and related professional services in local plans. Through our unrivalled network of Regional and National Chairs, we convene groups of leading industry practitioners and wider economic partners. This programme, complemented by our detailed pieces of economic research – provides us with a unique vehicle to engage with and provide industry expertise to policy makers across the UK.

There is strong recognition, which reflects our submission to the Strategy, that local/regional plans must align with national strategies for trade promotion and the attraction of global capital. We will continue to deepen our work with the Office for Investment on the establishment of its Strategic Opportunities Unit – a concept we proposed – to ensure that opportunities and investment are spread across the UK. 

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