Leeds Reforms: compliance expert debunks wave of emerging myths

Following Rachel Reeves’ recent announcement of the Leeds Reforms, one financial compliance expert has warned financial services businesses not to misunderstand key elements of the proposed changes.

The Leeds Reforms – a sweeping regulatory overhaul proposed by the new Chancellor – aims to modernise the UK’s financial services sector, with a particular focus on driving regional growth, streamlining regulatory burdens and increasing accountability within financial institutions.

Among the most high-profile components is the reform of the Senior Managers and Certification Regime (SMCR), which governs how responsibility and conduct are allocated and enforced among senior financial executives.

As the financial services sector digests the implications of the Leeds Reforms and the overhaul of the SMCR, a wave of misconceptions is emerging, risking confusion and missteps among firms preparing for change.

David Kenmir, advisory board chair at compliance training provider Skillcast, said:

“Much of the conversation around the Leeds Reforms 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. Firms need to move beyond headline interpretations and focus on what these reforms mean in practical, day-to-day compliance terms.

For example, a streamlined Certification Regime doesn’t mean compliance can be de-prioritised. It means firms have greater discretion in how they uphold standards – but with that discretion comes greater scrutiny. Likewise, moving towards a more principles-based approach under SMCR demands more, not less, from leadership in terms of clarity, judgement and accountability.

Another widespread misconception is that some roles – particularly in wholesale markets – may no longer require the same level of training or oversight. That’s simply not true. Regulators expect all individuals in regulated firms to remain demonstrably competent. Compliance training, culture and conduct remain central pillars of any effective compliance programme.

This isn’t the time for complacency. With reforms still under consultation, firms should be using this window to audit existing systems, engage senior leaders –  particularly those in key roles such as senior management functions (SMFs) – and plan ahead. A reduction in regulation does not mean a reduction in responsibility; it simply shifts the burden of compliance closer to the company itself. 

For SMFs, this means greater personal accountability and the need to demonstrate proactive governance, while compliance officers must reassess frameworks and controls to align with the evolving standards and CROs should revisit risk appetite and mitigation strategies in light of potentially broader discretion. Ultimately, businesses that will thrive under the new regime are the ones that act early, stay informed and approach reform as a chance to strengthen – not weaken – their compliance posture.”

Although the Chancellor has signalled strong intent, the reforms remain in the consultation phase, with formal legislation expected to be introduced in Parliament later this year or early 2026.

In light of these concerns and to help firms take a proactive, informed approach rather than react to speculation, David offers the following recommendations:

Understand the true intent behind reforms

Just because the Certification Regime is being streamlined doesn’t mean it’s being scrapped. Firms should fully understand the proposed changes – flexibility is being introduced, but accountability remains central. Avoid assumptions and seek clarity from trusted sources.

Don’t mistake fewer rules for less responsibility

The SMCR is not being watered down. Even with fewer prescriptive requirements, responsibility still lies squarely with firms and individuals. Treat reform as an opportunity to embed good governance more effectively – not to scale back standards.

Keep training and competency front and centre

Regardless of role, staff must continue to be properly trained and competent – including those in wholesale roles. Avoid thinking some functions are exempt from regulatory expectations. Ongoing employee training should be a non-negotiable part of compliance planning.

Plan smart, train smarter

More flexible regulation places greater onus on firms to plan effectively. Build a compliance strategy that includes targeted training, smarter resource allocation and proactive risk assessment. A generic approach won’t suffice in a principles-based system.

For more information about Skillcast, visit https://www.skillcast.com/.