Rachel Reeves accelerates deregulation push in Leeds Reforms
Rachel Reeves has laid out plans to “rewire” the financial services system in a deregulation push as part of her Leeds reforms package.
The Chancellor said the plans will make the UK the number one destination for financial services businesses by 2035 as the government “doubles down on the UK’s global strengths”.
The Leeds Reforms confirmed a crackdown on the Financial Services Ombudsman (FOS) with the watchdog to “be returned to its original purpose as a simple, impartial dispute resolution service”.
City minister Emma Reynolds had addressed concerns the FOS had become a “quasi regulator”. This follows complaints to the watchdog nearing PPI heights after a surge in motor finance grievances and a rise in professional representatives increased the regulator’s caseload by over 50 per cent.
David Postings, the chief executive of banking industry body UK Finance, welcomed the reforms to the FOS as helping “create a more pro-growth operating environment”.
Andy Briggs, Phoenix Group chief, said the steps were “encouraging” but argued it “makes complete sense for the FCA to set the principles of consumer protection and regulation.”
“The same standards should apply for the FOS. This would make it clearer and more consistent for customers and firms alike while also helping build trust across the sector.”
Ring-fencing reform
Britain’s banking giants are in line for a boost after the Chancellor confirmed the ring-fencing regime – which separates a lenders’ retail and investment activities – would be reformed.
The City minister is set to lead a review “looking at how changes can strike the right balance between growth and stability, including protecting consumer deposits”.
This follows calls from the bosses of Lloyds, Natwest, HSBC and Santander to scrap the 15-year-old legislation. But it comes after Governor of the Bank of England Andrew Bailey warned the removal would have a “negative effect on UK lending” due to funds being directed away from retail to investment or activities outside the UK.
Reeves also touted the added support for mid-sized banks as part of the Bank of England’s sweeping reforms to financial crisis regulation.
The Treasury expects changes to the MREL threshold – the minimum amount of money and certain types of debt a bank must have – will “free up billions for lending and investment”.