Post-Mansion House Reforms: A New Era of Growth-Focused Regulation

The FCA, PRA, and HM Treasury (HMT) have jointly launched a comprehensive programme of regulatory reforms in direct response to Chancellor Rachel Reeves’ Mansion House speech. Described as the most sweeping set of financial services changes in over a decade, the reforms signal a marked shift in regulatory philosophy—from cautious constraint to growth enablement.

At the heart of the Chancellor’s message was a call to cut red tape and ease post-2008 rulebooks. The resulting reforms include proposed amendments to the Senior Managers & Certification Regime (SM&CR), a review of bank ring-fencing rules, a recalibration of the Financial Ombudsman Service’s (FOS) remit, and broader changes to encourage long-term investment and innovation. The FCA, PRA, and HMT are now acting on this vision, collectively repositioning regulation as a platform for sustainable growth rather than a barrier to risk.

Key Highlights

1. HM Treasury – Legislative Recalibration and Strategic Redirection

The “Leeds Reforms”

HMT is spearheading a package of reforms—dubbed the Leeds Reforms—designed to modernise the UK’s regulatory landscape. At its core is a cultural pivot away from zero-risk tolerance toward “informed risk-taking,” intended to unlock institutional capital and foster innovation.

SM&CR Legislative Reform Consultation (July 2025)

• Proposes removing the Certification Regime from primary legislation so that the FCA and PRA can amend or revoke it through rulebooks.  The regime itself would remain in place, but become more agile and proportionate over time.
• Focuses on reducing pre-approval requirements, streamlining regulatory duplication, and easing onboarding for certified staff.

Curtailing Financial Ombudsman Scope

• HMT proposes restricting FOS’s role to case by case dispute resolution and making clear that only the FCA can interpret its rules.
• Clarifies that regulatory interpretation lies with the FCA, while FOS will focus solely on dispute resolution.
• Systemic complaints may fall under FCA supervision, and firms that have complied in good faith with guidance may be given regulatory safe harbours.

Future Areas of Reform

• ISA Enhancements: Potential new rules to encourage equity investments.
• Pensions Reform: Addressing pension adequacy and unlocking institutional capital.
• Capital Formation: Regulatory tweaks aimed at driving UK market competitiveness.

2. FCA – Supervisory Efficiency and Cultural Repositioning

SM&CR Operational Consultation (closes 7 October 2025)

• Seeks to reduce compliance burdens for over 140,000 certified individuals.
• Simplifies fit-and-proper assessments and streamlines the Senior Managers approval process.
• Consolidates Directory functions and shortens application processing timelines.

Retail Market Reforms

• Supporting HMT with reforms to ISA disclosure rules.
• Exploring incentives to increase direct retail participation in UK equities.

Shift in Regulatory Tone

• The FCA is committing to a more proportionate and facilitative supervisory culture.
• Future regulation will reflect a growth-enabling ethos, balancing innovation with consumer protection.

3. PRA – Ring-Fencing Review and Proportional Supervision

Ring-Fencing Reform

• PRA will lead technical work to reassess post-crisis ring-fencing rules separating retail and investment banking.
• Objective: ease restrictions where prudential risk is low, without compromising financial stability.

Supervisory Modernisation

• Aligned with FCA efforts to streamline SM&CR.
• Proposes differentiated requirements for smaller banks and insurers based on risk profile and complexity.

Next Steps for Firms

1. Review and Respond to Consultations

• Review the FCA/PRA consultation on operational changes to SM&CR (closes 7 October 2025).
• Prepare to respond to the forthcoming HMT legislative consultation.
• Consider submitting responses individually or via trade bodies (e.g. ABI, BIBA), particularly where SMF roles or certification burdens are impacted.

2. Reassess SM&CR Governance

• Map SMF and Certification roles to identify duplication or inefficiencies.
• Prepare to streamline fit-and-proper checks and onboarding processes.
• Align HR, compliance, and directory submissions to proposed simplifications.

3. Align with Growth-Enabling Regulatory Culture

• Update risk appetite and conduct frameworks to reflect the FCA’s new stance on proportionate oversight.
• Embed informed risk-taking into training and governance discussions.
• Ensure compliance and culture programmes shift from risk aversion to commercial enablement within regulatory boundaries.

4. Scenario Plan for Governance Adjustments

• Add Mansion House reforms as a recurring item on Board and Risk Committee agendas.
• Conduct scenario testing:
  • What if Certification Regime is removed?
  • What if pre-approval is no longer required for certain SMFs?
  • How will HR and compliance functions adapt?

5. Engage with Industry Networks

• Join working groups or roundtables shaping the reforms.
• Encourage trade associations to advocate for realistic implementation timelines and guidance on transitional provisions.

How Padda Consulting Can Support Your Firm

These reforms mark a pivotal opportunity to reshape compliance operations in a way that supports growth and innovation. Padda Consulting offers hands-on regulatory support to help you engage with and prepare for the changes.

1.SM&CR Reform Readiness Review

We can deliver a tailored gap analysis of your firm’s governance and certification arrangements, including:

• Role mapping and overlap identification.
• Readiness assessments aligned with HMT and FCA/PRA proposals.
• Recommendations to streamline governance and compliance frameworks.

2. Consultation Response Support

We can help you shape your voice in the regulatory conversation:

• Draft firm-specific responses to consultations.
• Strategic commentary and briefing packs for Executive and Board submission.
• Tailored input for trade association representation.

3. Culture and Conduct Advisory

Our advisory services focus on aligning compliance culture with the FCA’s new tone:

• Cultural risk assessments with a focus on “informed risk-taking.”
• Updated compliance training and communication strategies.
• Escalation protocols that support innovation and oversight.

4. Board & Senior Committee Briefings

We offer strategic briefings for Board and Committee settings:

• Impact assessments of Mansion House reforms.
• Compliance strategy papers aligned with growth priorities.
• Speaking notes and agenda support for governance leaders.

5. Training and Implementation Workshops

Equip your teams to respond proactively to regulatory change:

• SM&CR reform workshops.
• Culture and compliance realignment training.
• Cross-functional planning sessions for implementation execution.

Contact us  to schedule a readiness review, strategy session, or executive workshop. We can help your firm align with the future of regulation.