Chancellor’s Mansion House speech reveals package of reforms to financial services regulation

On 15 July 2025, the Chancellor of the Exchequer made her annual Mansion House speech to the financial services sector. The key announcement was the launch of a Financial Services Growth and Competitiveness Strategy which, alongside the Leeds Reforms financial services reform package, is designed to “rewire the financial system” and “make the UK the location of choice for financial services firms to set up, invest, grow and sell their services to the world” in the next decade. (The Leeds Reforms were unveiled by the Chancellor during a summit of financial executives in Leeds on 15 July 2025.)

The reforms will focus on reforming the UK financial services regulatory framework so that it is “proportionate, predictable and internationally competitive”:

• reducing regulatory burdens, for example, removing duplication for financial regulators;
• reforming the Financial Ombudsman Service (which deals with complaints between financial businesses and their customers) to return it back to a “simple, impartial dispute resolution service” from what it has morphed into, a quasi-regulator, and to look at how the consumer redress system can be ‘modernised’ to make sure that consumers receive “appropriate redress when things go wrong”;
• ‘streamlining’ the Senior Managers and Certification Regime, the senior management accountability framework that was introduced following the 2008 financial crisis ;
• making changes to the banks’ capital frameworks;
• considering concerns regarding the application of the Consumer Duty to wholesale firms; and
• “delivering targeted changes in the areas where the UK already has particular strengths”, concentrating on five core policy pillars: innovation & technology (including the UK becoming a ‘global hub’ for fintech, digital assets and AI-financial services); regulatory environment; regional growth; skills and access to talent; and international partnerships & trade.

There will also be a new authorisation and regulatory framework for UK captive insurance (a type of self-insurance where a subsidiary provides insurance to a parent company or the group).

The speech was notably light on pensions-specific announcements with a brief mention of the Pension Schemes Bill 2025, the 14 July 2025 announced Employer Pension Pledge on value for money (VfM) and the new form of pensions and retail investment support, ‘targeted support’, that will permit FCA-authorised firms to make ready-made suggestions appropriate for pre-defined consumer groups or cohorts with similar characteristics and circumstances.

Targeted support

On 30 June 2025, the Financial Conduct Authority (FCA) published a consultation on draft rules for a new type of pensions and retail investment support, ‘targeted support’. This will permit FCA-authorised firms to make ready-made suggestions appropriate for pre-defined consumer groups or cohorts with similar characteristics and circumstances so that they have assistance when making decisions regarding pensions and investments. It is noted as being particularly relevant for consumers under-saving for retirement, those who find it difficult to decide how to access their pension, and new investors.

The idea is that this new authorised activity will act as a “stepping stone to simplified or more comprehensive investment advice”. It involves making suggestions based on limited information but extending beyond guidance and providing a trade-off against personalised recommendations with the aim of helping achieve better consumer outcomes than if targeted support had not been provided. The idea is that it will improve both the accessibility and affordability of financial decision-making assistance.

The targeted support initiative forms part of other work that the FCA is currently conducting on providing a ‘clearer distinction’ between simplified and more holistic advice and clarifying the advice guidance boundary – the consultation also includes the FCA’s proposals on both of these areas.

The new targeted support system will have its own rules and authorisation gateway given the importance of it being regulated in a different way to current forms of financial advice. Authorised firms will have to comply with bespoke conduct standards.

The FCA consultation closes on 29 August 2025 and final rules are expected to be published by the end of 2025.

The draft statutory instrument making the necessary changes to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 to set up this new regulatory activity alongside a HM Treasury policy note were published on 15 July 2025 as part of the supplementary papers accompanying the Chancellor’s Mansion House speech. The legislation is expected to come into effect in 2025 provided parliamentary time permits.

A new Employer Pension Pledge on VfM

The Employer Pension Pledge was announced by the City of London Corporation on 14 July 2025. This is a voluntary initiative in which 20+ of the UK’s largest employers spanning finance, manufacturing and retail have committed to “prioritise net returns, not just cost, when selecting or reviewing [a] DC pension providers” and requesting “greater transparency from providers on private market allocations”. It will sit alongside the new VfM framework that is being introduced in 2028 under the Pension Schemes Bill 2025.

The Pledge was signed at the Mansion House dinner. It covers the ‘demand side’ of DC pension provision and sits separately to the Mansion House Compact and the Mansion House Accord which relate to the ‘supply side’. More than 500,000 UK workers and nearly 1 million savers are covered by the Pledge.

Both the Government and key pension industry players have expressed their support for the initiative.

Other announcements to note from a pension’s perspective

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