By David Kenmir, advisory board chair at Skillcast.
When Chancellor Rachel Reeves announced the Leeds Reforms – a sweeping overhaul of the UK’s financial services regulation – many headlines focused on a single theme: deregulation.
The reforms were framed as a way to streamline burdens, accelerate growth and modernise the sector. But as with all regulatory change, the reality is far more complex.
Regulation has always swung like a pendulum between rule-driven oversight and individual responsibility. Much of the recent conversation has focused on what might be removed or relaxed, but what’s often missed is the increased responsibility that comes with regulatory flexibility.
The shift we’re seeing is not about deregulation – it’s about modernisation. While the reforms aim to reduce red tape, they won’t make compliance simpler. In fact, less legislation will mean that responsibility shifts directly onto firms and individuals.
This demands a fundamental rethink of how compliance is approached within organisations. Fewer rules do not mean less compliance – in fact, with fewer prescriptive rules to rely on, compliance must evolve from a checklist to a cultural cornerstone.
Dispelling the myths and misconceptions
In the weeks following the announcement of the Leeds Reforms, misconceptions began circulating across the financial services industry.
Some executives interpreted streamlined frameworks as a relaxation of requirements, while others assumed that reduced rulebooks would translate into fewer training and oversight obligations, particularly in wholesale markets.
Another widespread misconception is that certain roles may no longer require the same level of training or oversight – but that’s simply not true. Regulators have been explicit that they expect all individuals in regulated firms to remain demonstrably competent, regardless of function or market segment.
So, what has changed is not the expectation of compliance, but the way it is tested and enforced. Firms will need to prove that their systems and culture can withstand scrutiny even without prescriptive rulebooks to lean on.
This elevates (rather than reduces) the importance of strong internal controls. Far from loosening standards, the reforms heighten the demand for firms to show that compliance is embedded in their decision-making – not just their paperwork.
The future of the Senior Managers and Certification Regime
Central to the reforms is the proposed modernisation of the Senior Managers and Certification Regime (SMCR) – the central pillar of accountability in UK financial services. While the proposed regulations may streamline certain processes, they do not dilute responsibility.
For Senior Management Functions (SMFs), this means sharper personal accountability. Leaders will be expected to not only set the tone but to demonstrate proactive governance and ensure that their decisions align with both regulatory principles and organisational values.
This includes clearer documentation of decision-making, more transparent allocation of responsibilities and the need to evidence challenge and oversight within senior committees. Regulators are likely to place greater emphasis on how senior leaders embed conduct and culture, not just how they manage compliance on paper.
For compliance officers and risk leaders, the challenge will be to adapt frameworks and controls to a less prescriptive regime. With broader discretion comes the risk of inconsistent application. It will fall on HR, compliance and risk teams to ensure that accountability maps remain up to date, certification processes are robust and risk appetites are redefined in line with greater flexibility.
The margin for error is small: any gaps in governance or training could be interpreted as failures of leadership under the new model. Firms that fail to embed clear, values-driven conduct standards risk falling foul of regulators, clients and the court of public opinion.
Fewer laws mean more focus on culture
Without detailed instructions for them to abide by, firms can no longer hide behind “we followed the rules” when it comes to covering their backs. Instead, they must prove that their culture, governance and internal controls uphold the spirit of regulation.
As a result, compliance is no longer an isolated function – it becomes a shared organisational responsibility. As I mentioned, a reduction in regulation does not mean a reduction in responsibility; it simply shifts the burden of compliance closer to the company itself.
Embedding compliance as culture means elevating it from a back-office task to a leadership priority. It requires firms to set clear expectations from the top, empower staff with the judgement to navigate grey areas and weave accountability into daily decision-making rather than relying on retrospective audits.
True cultural compliance is measured not by how well rules are followed, but by whether values and principles shape behaviour consistently across the organisation.
And if culture is the new frontline of compliance, then compliance training is its most powerful tool. Every employee – whether in retail banking, wholesale markets, or support functions – must be demonstrably competent and committed to high standards of conduct.
HR teams will play a central role here. They must ensure that recruitment, onboarding and professional development all reinforce compliance as a core value. Ongoing training should not be generic but tailored to roles, risks and evolving regulatory expectations.
Making the most of the preparation window
With the reforms still under consultation and legislation unlikely before late 2025 or early 2026, firms have a valuable window to prepare. Time may be on their side, but this is no moment for a ‘wait and see’ approach.
Instead, it is a chance to act early with a structured, proactive plan for the changes ahead. Early audits, stronger frameworks and active leadership engagement will allow firms to enter the new regime with confidence rather than scrambling to catch up.
Preparation should focus not only on systems and controls but also on demonstrating sound decision-making and embedding accountability into daily operations. This includes revisiting governance, testing escalation routes and aligning risk appetites with evolving regulatory expectations.
The firms that thrive during this new era of compliance will treat reform as a catalyst for progress. Those able to evidence accountability, prove robust governance and show that conduct is part of their DNA will distinguish themselves from their competition.
Ultimately, the Leeds Reforms make one thing clear: in an era of fewer rules but higher expectations, success will belong to firms that embed compliance as culture, embrace accountability as leadership and view trust as their most valuable currency.
