Mansion House speech – placing financial services front and centre of economic growth?

On Tuesday this week, ahead of the Mansion House speeches to come later that evening, the FCA made an early announcement of an essentially four-pronged strategy of reviews and changes to:

• Authorisations: maintaining a robust authorisations gateway, preventing entry to firms that might cause harm but slashing the timelines for authorisations and approvals;
• Senior Manager Regime: preserving the benefits of this standard-boosting regime but streamlining it for competitiveness and growth; 
• Redress: modernising the consumer redress framework to create the certainty needed for investment and innovation and to ensure that consumers receive appropriate and timely redress when things go wrong; and
• Capital in support of growth: simplified rules and lower cost burdens for companies raising the money needed for growth, including new rules for public offer platforms to make it easier for companies to raise capital by offering securities outside of a public market to a wider investor base that will include retail investors.

The buzzwords littered through these announcements include streamlined, certainty, expediency, proportionality, predictability, flexibility, transparency, and competitiveness. The message is clear: reduce the regulatory burden to drive and boost economic growth.

Alongside other current reforms in capital markets, to the advice guidance boundary, and to the rulebook, and together with innovations like PISCES and the Supercharged Sandbox, the new proposals form a strong push towards innovation and growth in the financial services industry. If they are properly backed-up by the key regulatory objectives of protecting the integrity of the UK’s financial services market and protecting consumers, and by the outcomes-based regulatory approach which places high standards, accountability and integrity at the apex of regulatory priorities, these proposals could also deliver on increased consumer awareness and confidence. 

In an almost mirror image of the FCA’s announcements, the Chancellor delivered her Mansion House speech later that evening, and she placed the financial services sector centre stage in her vision for growth. She proposed a rebalancing of risk and benefit in the retail investment space, support to the UK’s growing strength areas (including captive insurance, asset management, sustainable finance and fintech), and the unlocking capital for investment. She proposed reform of the FOS, the authorisations gateway, the Consumer Duty as it applies in the wholesale space, SM&CR, capital requirements and ring-fencing. 

For consumers, the Chancellor stated the hope for better outcomes, including better returns on savings, better deals on mortgages and more support in the making of financial decisions. Notable in the savers-space is the possibility, from next year, for LTAFs to be included in stocks and shares ISAs. This move could open up the private markets to retail investors, enabling them to diversify their investment portfolios and benefit from the potential for higher returns available on these kinds of assets. To assist consumers with making financial decisions, there will be a campaign to promote consumer confidence and awareness which will include education around the benefits of investing and a review of investment risk warnings with the aim of making them less complex and more consumer-friendly. Done well, this campaign could move the dial in the drive to shift consumer savings from cash to investments. 

In his Mansion House speech, the governor of The Bank of England, proposed changes to the UK's now-outdated payments infrastructure. He referred to opportunities to leverage new technologies to reduce fraud, improve functionality, and reduce costs. He also flagged up possibilities for stablecoins and a retail central bank digital currency to play a role in the payments space of the future.

Initial reactions from key industry bodies were positive, with upbeat announcements from those who have long-campaigned for development in the retail investment space, including for a push-back on safety-ism and for the awareness-raising initiative that will be so essential to get people investing and to equip and empower them to be able to do so. Changes in this space could help retail customers to better understand, to have access to clearer documentation, to get access to the advice and support that is right for them, and to make sound and informed decisions for their financial lives.

The challenges in consulting on and implementing these proposals will not be few and there are some significant questions to address including:

• If we radically streamline SM&CR, how will we be able to prioritise and promote good culture?
• If we move the dial on safety-ism, how will we upskill and educate consumers and ensure that in the new landscape they remain appropriately protected when things go wrong? 
• If we roll-back on regulation implemented on the back of learning from financial crises, how will we mitigate risk, will new risks emerge, and who will be responsible for them?
• If we cut the protections that have been inbuilt to protect consumers, how do we retain and enhance consumer confidence and build consumer trust in the idea that the markets are a safe place to invest their money, especially when riskier opportunities are being opened up for them?
• Are we encouraging the making of a financial return over and above market stability and consumer protection and, if so, is it right to put the industry's conduct regulator at the centre of that?

Mansion House day delivered some positive news for the UK's financial services industry, but it remains to be seen whether these proposals will be capable of moving the dial in the UK's growth conundrum. The financial services sector is not singularly responsible for economic growth and there are currently many other significant factors for the UK to contend with aside from its heavily regulated financial services sector. The UK has poor growth prospects, uncertain tax changes to come in the autumn budget, fluctuating unemployment and inflation, and these and other factors will play a part in the drive to get the economy booming again.

A final thought around deregulation and the cycle of financial crises, each of which pushes the rule books toward greater oversight, a reduction in risk-taking, and more protection. If the government urges the taking of more risk to boost growth, who will take responsibility for that risk? In the news this same week, echoing similar news from just a week or so ago, we have seen headlines about very significant regulatory fines against big-name banks for poor financial crime controls. This is clear contemporaneous evidence that things can go wrong even when the regulatory requirements are clear and present for very good reasons.

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These are the most wide-ranging package of reforms to financial services regulation in more than a decade. At Mansion House last year, I said we must regulate for growth and not just for risk… …and we are delivering on that commitment… …while continuing to protect financial stability… …so that the benefits of a thriving and growing financial services sector can be realised for people all over Britain.

https://www.gov.uk/government/speeches/rachel-reeves-mansion-house-2025-speech