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Finance minister Rachel Reeves has unveiled reforms intended to inject momentum into the economy, promising to slash red tape and accelerate upgrades to the country’s payments infrastructure.
In her annual Mansion House speech, Reeves set out a new strategy for UK financial services, dubbed the Leeds Reforms, intended to attract investment, promote innovation and improve public engagement with capital markets.
The measures include a major shake-up of accountability rules and increased support for next-generation retail payments infrastructure.
Fintech focus
The UK financial services sector has recently suffered a series of blows, including Wise’s decision to move its main share listing from London to the US.
In a bid to spur new momentum in the space, HM Treasury has talked up its ambition of “making the UK the fintech capital of the world”.
According to the government, it will provide “bespoke support” to firms as they start, scale and list. Fintechs will receive intensive support through the start-up phase, helping them create a proven concept and attract growth funding.
The government has also said that a single regulator point of contact will help these businesses through the scale-up phase, providing technical support to help them understand requirements and aiming to speed up regulator responsiveness.
The sector is to be supported by a better pipeline of skills, with a new Global Talent Taskforce helping attract top international talent to the UK.
There will be funding for 50 PhD students through the £187m TechFirst programme to align their research with the needs of key players in the sector.
In addition, a new financial services skills compact led by the Financial Services Skills Commission will be introduced to ensure skills needs are met.
NPV moves forward
As part of the reforms, the government’s National Payments Vision (NPV) has entered a new phase, with an updated delivery model announced by the Payments Vision Delivery Committee.
The initiative sets out how the UK will develop a modern retail payments infrastructure, with a strong emphasis on public-private collaboration.
The new model features a Retail Payments Infrastructure Board, chaired by the Bank of England, to translate strategy into design.
An industry-led Delivery Company, with Barclays UK CEO Vim Maru as chair designate, will be responsible for procuring and implementing the new infrastructure, and Pay.UK’s role as operator of the current Faster Payments System is also reaffirmed.
The Delivery Committee will publish a detailed strategy in the autumn, setting out priorities around innovation, competition and security.
A Payments Forward Plan, due by the end of the year, will map a sequenced rollout across both retail and wholesale payments, aligning closely with the UK’s work on a potential digital pound.
The government said the approach reflects lessons from international comparisons and incorporates input from more than 30 industry representatives via the Vision Engagement Group.
According to Max Savoie, partner at Ashurst, “the latest statement on the NPV builds on the government's November 2024 report by setting out more detailed plans on governance for the UK's future payments architecture”.
“The plan for a public-private Retail Payments Infrastructure Board and an industry-owned and led Delivery Company reflects the complexity of the stakeholder arrangements involved,” he told Vixio.
“My sense is that this is intended to create the space to address some of the issues around governance and funding models identified in the November report. How the new board operates in practice and the structure of the Delivery Company will be crucial here.”
According to Savoie, it also remains to be seen how the government, the regulators and market stakeholders will balance the three laudable policy pillars under which the NPV is intended to stand: innovation, competition and security.
“In practice, there will be trade-offs to make.”
Kanv Pandit, head of international banking and payments at FIS, said that the update sets “a strong and ambitious course” for “a modern, world-leading infrastructure that supports interoperability, innovation and global competitiveness. But delivering on that ambition will require urgency, coordination and accountability.”
"The forthcoming Payments Forward Plan must now mark the shift from vision to execution, ensuring we build a real-time, intelligent and resilient payments infrastructure that delivers for consumers, businesses and the broader economy,” he added.
"This is a critical moment for regulators, banks, fintechs and infrastructure providers to come together, modernising the systems that underpin the UK economy and reinforcing its competitiveness on the global stage."
SM&CR Reforms
The Leeds Reforms include a significant potential revision of the Senior Managers and Certification Regime (SM&CR), which aims to address industry concerns over regulatory burdens.
A joint consultation by the Treasury, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) outlines proposals to simplify the framework while maintaining accountability standards for senior executives.
The proposed changes include scrapping the Certification Regime, reducing the number of roles that require prior regulatory approval and giving firms more flexibility in defining and reporting responsibilities.
The reforms also propose longer timeframes for applications and updates, and streamlined annual checks of individuals’ fitness and propriety.
The government says the reforms will cut costs and administrative delays without weakening protections. Nearly all senior manager applications are now processed within three months, with a two-month statutory target now in place.
Hugh Fairclough, partner at RSM UK, said that SM&CR “was a key pillar of the post-financial crisis drive towards greater accountability in financial services,” suggesting that the government may be looking for ways to increase growth and competitiveness without directly impacting consumers.
“Streamlining the SM&CR doesn’t immediately open up new growth opportunities, but it should encourage innovation and competition,” he added.
“This might also encourage more risk taking, so appropriate guardrails will need to be in place to protect consumers. The past crises that have followed previous attempts to deregulate, including the 2008 banking crisis, must not be forgotten.”
