Kemi Badenoch pledges to axe post-crisis banking rules to boost UK economy

Key facts

• Conservative leader Kemi Badenoch plans to reform UK financial regulations.
• Proposals include scrapping ringfencing, slashing capital requirements, and replacing the Financial Ombudsman Service.
• Badenoch argues these changes will make the UK more 'investable' and boost the economy.
• The reforms aim to remove regulations implemented after the 2008 financial crisis.
• Reducing borrowing is seen as key to avoiding reliance on bond markets.

Conservative leader Kemi Badenoch is set to unveil a series of policy proposals aimed at revitalizing the UK's financial services sector and making the country more 'investable'. The plans, which include scrapping ringfencing, slashing capital requirements, and abolishing the financial ombudsman, are intended to move away from regulations that have stifled the sector since the 2008 financial crash. Badenoch argues that reducing borrowing is essential to avoid over-reliance on bond markets.

Badenoch's proposed reforms include ditching ring-fencing, a measure requiring major banks to separate their retail banking operations from investment banking activities, which she claims adds friction and hinders investment. She also plans to replace the Financial Ombudsman Service with an independent body focused on facts and law, and to reduce lender capital requirements, which she argues have been excessively piled on. The Conservatives would seek to change the legal framework governing the banking watchdog and the Financial Policy Committee to consider competitor jurisdictions when setting these requirements.

Industry bodies like UK Finance have welcomed engagement on enhancing UK competitiveness, while TheCityUK CEO Miles Celic called Badenoch's pledges a valuable contribution to the debate on modernizing the regulatory system. Former Bank of England Deputy Governor Sir Andrew Large supported the top-down approach to regulation. However, a Labour Party spokesperson criticized the Conservatives' economic record and Badenoch's past inaction on such reforms, asserting Labour has stabilized public finances.