In her annual Mansion House speech to City grandees on Tuesday, the chancellor emphasised reforms to get pension funds investing more in ‘productive investments’, relaxed rules for financial services firms and an impact assessment of the Consumer Duty. The adequacy part of the Pensions Review was not announced as some had hoped.

As well as introducing changes to relax rules created in reaction to the global financial crisis, Reeves told City executives that “we must do more to ensure that British savers benefit from the success of growing British businesses”.  

She highlighted the pension schemes bill, which proposes creating defined contribution and Local Government Pension Scheme “megafunds”, with Reeves saying they “will mean larger and more powerful pots of funding invested productively across the country”.  

The Mansion House Accord also featured, where signatories pledge to invest at least 10% of their defaults into private assets, of which half is earmarked for UK projects, and Reeves congratulated the Lord Mayor of London on a recently launched ‘employer pledge’ to prioritise value when choosing a pension provider.   
   

     

On the financial sector more broadly, the chancellor wants regulators to regulate for growth, saying: “I am rolling back regulation that has gone too far in seeking to eliminate risk.” 

Among the measures are reduced capital requirements, a relaxed senior managers regime, and the Financial Services Ombudsman having its wings clipped. Draft legislation is due in early 2026 to replace the EU’s alternative investment fund managers directive, she observed, and noted that the government has chosen not to create a UK green taxonomy after all.  

The chancellor has also tasked the Financial Conduct Authority with “assessing the impact of the Consumer Duty and whether it unduly [affects] wholesale activity”. 

The Investment Association welcomed the announcements. Chief executive Chris Cummings said: “Cutting red tape to attract investment and drive growth will help ensure the UK remains a world-leading centre for investment management, in particular the reforms to the Financial Ombudsman Service and the Senior Managers and Certification Regime as well as the review of Consumer Duty.” 

Others are alarmed; the Transparency Task Force has written an open letter to the Treasury Select Committee and is calling for an urgent parliamentary intervention as consumer protections are being rolled back. 

“What we are witnessing is not technical regulatory adjustment but regulatory amnesia in relation to the lessons learned from the 2008 financial crisis,” said TTF founder Andy Agathangelou. “The apparent coordination between HM Treasury and supposedly independent regulators reveals a system of regulatory capture that puts industry profits ahead of market stability and consumer protection.” 

Reeves did not announce a much-anticipated review of pensions adequacy during her address, disappointing pensions industry expectations. mallowstreet understands this will be kicked off by the Department for Work and Pensions, rather than the Treasury, and could still be made public before parliament rises on Tuesday.   
   

   

The review was originally scheduled to take place in late 2024 but was postponed by the Treasury after employers were unhappy about being saddled with a £25bn hike in national insurance contributions, at the same time as the national minimum wage increased as well.

   

   
What the upcoming adequacy review will focus on is unclear. While in the pensions industry there is consensus that minimum pension contribution levels need to rise from the current 8%, especially for employers, the government is reluctant to put further financial pressure on these, and the pensions minister has repeatedly said that contributions should not be the sole focus.   

Instead, the government has been emphasising the role of higher returns, claiming this can be achieved through private market investments. Torsten Bell also recently hinted at a need for risk sharing, something pure DC schemes do not do by design.
   

   

Legislation to expand collective DC schemes to multi-employer providers is expected later this year, and the government has suggested it also wants to see retirement-only CDC in future as part of guided retirement solutions.  

A reserve power with which the government could force pension funds to invest in ‘productive' assets was not mentioned in the speech either, whether for being too incendiary or because of uncertainty about whether it will remain in the bill. At its second reading, an opposition MP accused the government of wanting to direct where schemes invest, calling it "government procurement by the back door".