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In recent years, the Chancellor’s Mansion House speech has become a major event for announcements on financial regulation, so much so that it is arguably now in the Treasury’s top three of annual set pieces after the Budget and Spring/Autumn Statement. In 2025, the Mansion House speech had almost as much pitch rolling as a Budget. It also fragmented somewhat, with a morning non-London launch of the ‘Leeds Reforms’ in, unsurprisingly, Leeds, before a dash to London for the evening speech. The choice of venue was two-edged: Leeds is often viewed as England’s second financial services centre and also happens to be the location of the Chancellor’s constituency (Leeds West and Pudsey).
As ever, much of what emerged was either already in progress or a consultation starting gun. The main points of interest for the personal financial services industry were:
Reduced role of the Financial Ombudsman Service (FOS). The FOS will see its powers curtailed if proposals in a consultation document issued on 15 July come to fruition. These would introduce package of reforms to the FOS’s legislative framework, aimed at stopping (to quote the Treasury press release) “the FOS acting as a quasi-regulator and ensur[ing] that the FOS is delivering its role as a simple, impartial dispute resolution service.” Compensation interest rates will be cut from 8%, to base +1% and an outright ten-year time limit imposed on claims.
Consumer investment promotion. A Government-backed (but financial services industry-funded) advertising campaign will begin next year to encourage individuals to invest their savings in the stock market. The Treasury’s press release says that “Banks will send investment opportunities to savers with cash sitting in low-interest accounts for the first time.” It goes on to state – with no caveats – “Under current trends, moving £2,000 from these accounts to stocks and shares could make millions of people over £9,000 better off in 20 years’ time.” For the record, the last 20 years includes the period of over 13 years from March 2009 to June 2022 when the Bank (Base) Rate was 1% or less.
ISAs. The subtext to the consumer investment promotion is the widely anticipated cut in the cash ISA contribution limit. In her Mansion House speech Rachel Reeves repeated the ‘reform to improve returns for savers’ mantra and said she would continue discussions. However, the only ISA news was confirmation that Long-Term Asset Funds can be included in stocks and shares ISAs.
Risk warning revisions. The Government plans to revise the language on investment product warnings to help consumers more accurately assess financial risk, with a report due out in January 2026.
Senior Managers & Certification Regime (SM&CR). In 2023, the previous Government launched a Call for Evidence into the performance, effectiveness and scope of the regime. Somewhat predictably, the responses raised concerns about the compliance burdens imposed by the SM&CR, especially when appointing new executives. The Government has now launched a consultation on legislative changes to reduce the SM&CR’s regulatory burdens.
Relaxed mortgage lending rules. This is a slightly smoke-and-mirrors change. Mortgage lenders have been restricted to a maximum of 15% of their new loans falling into the category of high LTI (loan-to-income) ratio (at least 4.5 times a borrower's annual income). In practice, the latest (Q1 2025) overall proportion of such loans was 9.7%. From 16 July, lenders can apply to the Prudential Regulatory Authority (PRA) for a modification of the rule to allow them to break the 15% ceiling. However, the PRA will still aim for the aggregate flow of high LTI mortgages to remain “consistent with the 15% limit”. Nationwide was first out the blocks with a press release on its Helping Hand First Time Buyer (FTB) loan with a maximum 6x LTI.
Permanent mortgage guarantee scheme A Government-backed scheme, starting this month will cover lender losses in cases of borrower default, encouraging banks to offer mortgages from 90%+ to 95% loan-to-value ratios to both first-time buyers (FTBs) and home movers. Lenders will be required to pay “a commercial fee” quarterly, based on the size of the loan.
Source: Techlink Professional
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