When the Chancellor stood up in Leeds to announce her reforms, the headlines honed in on “cutting red tape”. But, unlike some, I certainly didn’t interpret this as a call to start lighting the bonfire on regulations, instead I heard Rachel Reeves’ briefing as a challenge, questioning whether financial service firms can be trusted to take ownership of competence without leaning on prescriptive rulebooks?
This is a question every board should be asking itself right now.
The Leeds Reforms aren’t about deregulation. They’re about modernising and reallocating responsibility from the regulators directly into the boardroom. Responsibility is shifting from Westminster and Canary Wharf into the hands of boards and executives.
This change makes training not just a compliance function, but a strategic imperative that sits squarely with the C-Suite. No longer a compliance tick-box, it’s a board level responsibility.
The disappearing safety net
Let’s start with the Senior Managers and Certification Regime. By stripping out some of the statutory duties – annual certification and recordkeeping requirements – the government is removing the scaffolding firms have relied so heavily upon for the past decade. The FCA Register is shrinking, too. In short, the safety net is going.
This adjustment means that firms can’t just point to regulator-mandated processes as evidence of competence. You’ll need to provide solid evidence yourself, through your own frameworks, records and culture.
This responsibility doesn’t just fall into compliance’s laps. SMFs, HR and customer-facing teams will all need to take responsibility for competence, and annual training programmes signed off with a shrug won’t cut it. Training has to become a cycle, embedded into foundations: assess, develop, monitor, repeat.
Earlier in my career, I encountered firms that buried their heads in the sand, thinking that “principle-based” meant “do less”. Inevitably, those were the firms that got caught out. A thinner rulebook doesn’t lighten the load; it raises the stakes.
The skills crunch
If anyone was ever in doubt about why training must be elevated, just look at the numbers. The government’s own Sector Skills Needs Assessment found that 24% of financial services vacancies are hard to fill because of skill shortages, and 7.7% of staff aren’t fully proficient in their jobs. This isn’t just a blip, but indicators of a structural weakness in the talent pipeline.
Meanwhile, the sector is spending far less time and money developing its people, as the UK’s latest Employer Skills Survey shows that firms invested £53 billion in training in 2024, down £6 billion from 2022. Spend per employee also fell from £1,960 to £1,700 in the same period.
And demand is only accelerating. Research by Morgan MKinley and Vacancysoft shows UK fintech hiring will jump 32% this year, with risk and compliance roles up 29%, financial crime specialists up 50% and fraud-based roles set to double.
The arms race for talent is already underway, and firms that don’t develop their people internally will find themselves left behind.
When you connect the dots, the conclusion is inescapable. The skills crunch is alive and kicking, and boards can’t afford to treat training their people as an afterthought.
What leaders need to do differently
The reforms are still under consultation, but firms mustn’t wait for final legislation. Now is the time to act, and from my perspective, three priorities stand out for executive teams.
First, audit, don’t assume. Don’t assume your current certification or training processes will map neatly onto the new regime. It’s essential to question “Where are the weak points?” “Where are you relying on the regulator to hold the pen, instead of owning it yourself?”
Second, engage leadership. I’ve seen too many occasions where training is treated as “something HR will sort out.” This mindset has to change and SMFs and directors need to understand that competence is their professional responsibility. They must be seen to lead on it.
Finally, invest in culture. Compliance can’t be demonstrated with a single e-learning course ticked off in January. It’s about continuous learning, coaching and embedding accountability into day-to-day decision making. Done right, training becomes part of the fabric of your governance.
The Leeds Reforms give firms more freedom – but with that comes scrutiny. The businesses set to thrive won’t be scaling back. They’ll be raising their standards, building capability and treating training as a strategic asset.
At the end of the day, compliance isn’t just about avoiding regulatory sanctions, it’s about investing in your people, putting your trust in them and building a more resilient business. And, it’s about making sure the UK’s ambitions to be a global fintech leader aren’t undermined by a lack of skills.
The regulator has passed the baton. Now it’s the C-Suite’s race to run.
By Katharine Leaman, Advisory Board Member at Skillcast.
