Reeves unveils City reforms aimed at cutting red tape and fuelling UK growth

Rachel Reeves has unveiled a package of City reforms meant to cut “unnecessary” red tape and encourage more financial risk-taking by companies and consumers in the hopes of spurring economic growth.

In a financial services strategy dubbed the Leeds Reforms, the chancellor outlined initiatives designed to boost the financial services sector, including plans to cut “unnecessary costs” related to accountability rules for senior bankers, and launch an advertising campaign to get consumers investing cash savings in stocks.

The UK government will review ringfencing rules – introduced after the 2008 financial crisis – that are meant to protect consumer cash from a bank’s riskier business activities in the coming months.

The independence of the Financial Ombudsman Service, which settles complaints between consumers and businesses, will be watered down. The rate of interest – and total compensation – that banks and other City firms have to pay to wronged consumers will be reduced.

The reforms were announced ahead of Reeves’s Mansion House speech, where she will address the most senior bosses from across the financial services sector during a dinner at the Guildhall in London on Tuesday night.

The chancellor is under pressure after official figures last week showed the economy shrank by 0.1% in May, and she is widely expected to have to raise taxes again in the autumn budget.

Business groups have blamed Reeves’s £25bn increase in employer national insurance contributions – which came into force in April – for weighing on growth, while Donald Trump’s trade war has sapped confidence.

Reeves said in a statement on Tuesday morning: “We fixed the public finances and stabilised the economy. Now we need to double down on our global strengths to put the UK ahead in the global race for financial businesses, creating good, skilled jobs in every part of the country and helping savers’ money go further through our plan for change.”

The Leeds Reforms were revealed during a summit with City bosses in West Yorkshire, including the Lloyds Banking Group chief executive, Charlie Nunn.

The bosses of City regulators, who have been under pressure to cut regulatory burdens on UK firms, were also in attendance, including the Financial Conduct Authority’s chief executive, Nikhil Rathi, and the head of the Bank of England’s Prudential Regulation Authority, Sam Woods.

The Treasury said the package of reforms would ultimately “tear down the barriers” to investment while “reintroducing informed risk-taking into the system, cutting unnecessary red tape, driving more finance into public markets and actively helping international companies to set up in the UK”.

Together, the reforms are intended to make the UK the “number one” hub for financial services firms by 2035, with the Labour government saying it will help attract inward investment.