Following the release of the UK Government's Modern Industrial Strategy in June, the Financial Services Growth & Competitiveness Strategy (the Financial Services Strategy) was introduced on 15 July 2025. This Strategy sets out a ten-year plan to revitalise the Financial Services sector, and aims to make the UK the global location of choice for firms to invest, innovate and grow.

Financial Services is identified as one of the eight high-growth sectors (the IS-8). It maintains the five core pillars of the broader Modern Industrial Strategy and focuses on:

  • regulatory reform,
  • global leadership,
  • innovation and FinTech,
  • retail investment and capital markets and
  • skills and talent development.

So, what are the key points for those operating in the Financial Services sector and how will they be affected by the new Strategy? In this article, we pull out some of the key highlights from the Financial Services Strategy.

Legal scrutiny in a growth-focused regulatory shift

The regulatory shift proposed in the Financial Services Strategy requires forethought from the government to ensure that the pursuit of economic expansion does not come at the cost of legal integrity, consumer protection or systemic stability. Growth must be prioritised alongside risk management, as while these changes aim to make the UK more attractive to financial services, they also risk weakening the checks that protect consumers and market integrity. This is the counterweight to the Financial Services Strategy's growth ambitions and without it the UK risks undermining the very stability and trust that make it a global financial centre.

Regulating for growth, a balancing act

The Financial Services Strategy proposes a shift away from regulating for risk and moves towards enabling for growth. The key areas highlighted for regulatory reforms are as follows:

  • Shortened statutory deadlines for authorisations and approvals by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), which aim to reduce barriers to market entry.
  • Streamlining the Senior Managers and Certification Regime, with legislative changes to reduce the number of roles requiring pre-approval.
  • Reforming the Financial Ombudsman Service to clarify its role and improve consistency in outcomes. This includes introducing time limits and mechanisms for FCA input on rule interpretation.
  • Tailoring capital requirements and reforming the ring-fencing regime to support financial institutions to better serve UK businesses while maintaining financial stability.

The reforms are clearly aimed at reducing "red tape" and creating a more agile regulatory environment, replacing speed for safety, maintaining consumer protection and mitigating systemic risks.

Global leadership: frameworks for cross-border finance

A clear focus of the Financial Services Strategy is to create better legal frameworks for cross-border operations. The aim is to deepen international partnerships and enhance market access through:

  • Free Trade Agreements and bespoke treaties like the Berne Financial Services Agreement, which uses outcomes-based mutual recognition to reduce duplicative compliance.
  • Overseas Recognition Regimes to harmonise regulatory recognition of foreign jurisdictions.
  • Office for Investment: Financial Services, a concierge service to support international firms navigating UK regulations.
  • Maintaining strong relationships with advanced markets such as the EU and US, and deepening ties with emerging markets such as India and China.

A cross-border compliance strategy and dispute resolution frameworks reflect the pivot towards regulatory interoperability and mutual recognition to ease barriers to international trade and cooperation.

Innovation and FinTech: enablement of emerging technologies

The Financial Services Strategy positions the UK as a global FinTech hub and recognises the need to empower companies to bring new and emerging technologies to the UK through agile regulations and legislative guidance. The following methods have been proposed:

  • Launching a Scale-Up Unit within the FCA and PRA to support innovative firms.
  • Accelerating Open Finance and Smart Data initiatives, with regulatory sandboxes and digital identity frameworks.
  • Modernising payments law, including regulation of stablecoins and digital assets.
  • Appointing a Financial Services "AI Champion" and creating a digital library of regulatory guidance.

There will be a need for clarity on data protection and anti-money laundering compliance using digital ID, and the treatment of AI-driven financial products under existing regulatory regimes.

Retail investment and capital markets: legal reforms to boost participation

Investment rates across the UK in retail are low and have been for some time. To address this and attempt to reverse the trend, the government has suggested:

  • Reforming the advice and guidance landscape, with targeted support and simplified disclosures.
  • Moving Long-Term Asset Funds into Stocks & Shares ISAs to broaden access.
  • Establishing PISCES, a new exchange for private company shares.
  • Overhauling the UK's Prospectus Regime and capital markets rules to reduce "red tape".

These changes aim to balance investor protection with market efficiency and may require changes to consumer law, financial promotions regulations and listing requirements.

Skills and talent: immigration and employment dimensions

These changes include:

  • Visa reforms to attract global talent, including changes to the Global Talent and Innovator Founder visas.
  • Establishing a Global Talent Taskforce and Labour Market Evidence Group.
  • The development of a sector skills compact to address skills gaps and the commission of a report on essential AI skills to align training with industry needs.

While these changes relate to employment and immigration law, they will influence how financial services firms are able to structure recruitment and initiate training programmes.

Regional clusters and infrastructure: location based considerations

The Modern Industrial Strategy, across every sector, is encouraging regional hubs across the UK to ensure an even and fair distribution across the population. In terms of Financial Services, the government have committed to:

  • Annual reporting on progress using metrics like Gross Value Added (GVA), exports, productivity, and regional growth.
  • Legislative timelines for reforms, with many changes requiring primary legislation.
  • Investment in transport, housing, and digital infrastructure to support clusters in cities like Glasgow, Leeds, and Manchester.
  • The introduction of the TechFirst Programme: £187 million to support regional innovation and talent development.

What does the Financial Services Strategy mean for Financial Services in the UK?

As the Strategy evolves and regulatory definitions are refined, further clarifications will inevitably be introduced. Many of the proposed reforms will require detailed interpretation and, in some cases, legislative change. For businesses operating in this dynamic environment, legal guidance will be essential to ensure continued compliance and to navigate the complexities of a rapidly shifting regulatory landscape. If implemented effectively, the Strategy could mark a turning point, transforming the financial services sector into a key driver of long-term, inclusive economic growth for the UK.

With implementation already underway, we will continue to monitor developments across the sector closely. To stay informed on the latest developments and legal insights, sign up to receive our updates.