The Leeds Reforms — the Chancellor’s new plans for investing and the financial markets — promise to widen equity ownership and cut red tape. But what do they actually mean for your money?
The phone rings. It’s your bank with “exciting news” about investment opportunities. A cheerful voice explains how you could be earning so much more than the measly 1% sitting in your savings account. “We’ve identified you as someone who might benefit from our new investment guidance service,” they say. “Would you like to hear more?”
This scenario is about to become reality for millions of British savers. Chancellor Rachel Reeves has explicitly compared her new financial reforms to “Tell Sid”, the famous 1980s advertising campaign that encouraged everyone to buy shares in British Gas during privatisation. Back then, television adverts urged people to tell their friends about this chance to own a piece of Britain’s economic future, and “Tell Sid” became a cultural phenomenon.
The Leeds Reforms, announced this week, represent “the widest set of reforms to financial services for more than a decade.” Banks will now actively pitch investment products to customers with large cash balances. Major financial institutions are backing an advertising campaign to highlight the benefits of investing. Long-term asset funds will be available in ISAs for the first time.
But here’s the crucial difference: unlike the original “Tell Sid” campaign, which offered shares in a single, easy-to-understand utility company, these reforms push savers towards a much more complex world of private equity, alternative investments, and deregulated financial services.
The government’s timing isn’t coincidental. The UK has the lowest retail investment rates in the G7, with millions keeping money in cash accounts earning around 1% when stocks and shares have delivered average returns of 9% over the past decade. Moving £2,000 from cash to investments today could leave you £9,000 better off in 20 years, according to Treasury calculations.
The question isn’t whether more people should invest – most financial experts agree they should. The question is whether these particular reforms will help ordinary savers make better investment decisions, or simply make it easier for financial firms to sell them expensive products.
So what’s driving this new push? And where might it lead? Let’s break it down: the good, the bad, and the ugly.
The good: Finally tackling Britain’s cash addiction
Here’s where the Leeds Reforms could help.
There’s a genuine problem the Leeds Reforms are trying to solve. Britain has become a nation of cash hoarders, and it’s costing us dearly. According to government figures, more than 29 million adults keep savings in accounts earning just 1%, missing out on the long-term benefits of equity investment.
The case for moving some cash into investments is compelling. While cash accounts currently offer 1-2% interest, a diversified portfolio of stocks and shares has historically delivered much stronger returns. Someone investing £2,000 today could have £12,000 in 20 years, compared to just £2,700 if they kept it in cash at current rates. (Please note that this projection is based on historical market performance and past returns don’t guarantee future results).
Here’s where the reforms get something genuinely right: they’re trying to fix how we talk about investment risk. Currently, almost every investment product carries the same blunt warning: “Capital at Risk.” Whether you’re buying a diversified global index fund or speculating on cryptocurrency, the message is identical.
James Carter from Fidelity makes a compelling case for change: “We believe that risk warnings need reform to focus on informing – not just warning. This means empowering consumers by explaining what different types of risk mean and how taking some risk can lead to better outcomes over time.”
Carter’s research shows these warnings deter investors — especially women. When risk is explained in more balanced terms, people feel more engaged and better equipped to make informed decisions.
This shift from warning to informing represents genuinely helpful reform. The tragedy is that this sensible change is being bundled with reforms that do precisely the opposite.
The bad: When your bank becomes a salesperson
But not everything is rosy.
The most immediate change you’ll notice is that your bank’s relationship with you is about to shift fundamentally. Under new “targeted support” rules, banks can actively pitch investment products to customers with large cash balances for the first time. This isn’t financial advice – it’s sales.
The timing is particularly worrying because consumer protections are being weakened just as sales pressure increases. The Financial Ombudsman Service, which investigates complaints when things go wrong, is being “reformed” in ways that will make it much harder to get meaningful compensation.
Currently, if the ombudsman finds in your favour, you can expect around 8% interest on delayed compensation. Under the new rules, that drops to just 1% plus the Bank of England base rate. For someone owed £10,000, that’s the difference between receiving £800 annually in compensation interest versus roughly £150.
Andy Agathangelou, founder of the Transparency Task Force, has written an open letter to the Treasury Select Committee warning of a “co-ordinated and dangerous rollback of consumer and regulatory protections.” He argues that these changes prioritise “short-term deregulatory gains” over “long-term market integrity and consumer trust.”
The ombudsman is being “returned to its original purpose as a simple, impartial dispute resolution service” rather than acting as a “quasi-regulator.” In practice, this means its decisions will be more closely aligned with industry-friendly Financial Conduct Authority rules.
Agathangelou warns that “firms could be shielded from redress even where conduct was demonstrably unfair, so long as FCA rules weren’t technically breached.” This risks turning the ombudsman into “a mechanism for damage control rather than justice.”
The reforms also weaken the Senior Managers and Certification Regime, introduced after the 2008 financial crisis to ensure personal accountability at senior levels of financial firms. The new “streamlined” version will cut the burden on firms by half.
His stark warning to Parliament: “If these changes go unchallenged, the next financial scandal is not a matter of ‘if’, but ‘when’.”
The ugly: The private equity sales pitch
And here’s where things get especially murky.
Behind the marketing campaigns lies the most troubling aspect of the Leeds Reforms: a coordinated push to channel your pension money into private equity investments that primarily benefit asset managers rather than savers.
Under the Mansion House Accord, pension providers managing 90% of active savers’ defined contribution schemes have pledged to invest 10% of their portfolios in private markets by 2030. This represents a massive shift: current private equity allocation in UK pensions is just 0.36% of total funds. The target would funnel £74 billion into private markets.
The government’s pitch sounds compelling: these investments will support UK infrastructure, drive innovation, and deliver better returns. But here’s what pension consultants know and politicians prefer not to mention: over the long term, private equity returns are no better than those from simple, low-cost index funds. Multiple academic studies have found that once you account for fees, illiquidity, and risk, private equity’s supposed advantages evaporate.
What private equity definitively adds is cost and complexity. Unlike publicly traded shares, you can’t easily check the value of your private equity holdings or exit when you need to. Fee structures are labyrinthine, often involving management fees, performance fees, and transaction costs that can consume 3-4% of your investment annually. Compare that to a basic index fund charging 0.1% per year.
It’s a classic case of what’s good for investors being bad for the industry and vice versa. Asset managers love private equity because the fees are so much higher than traditional investments. For someone with a £100,000 pension pot, that’s the difference between paying £3,000 or £100 in annual fees.
What the Leeds Reforms miss
For all the fanfare about encouraging investment, the Leeds Reforms reveal as much through what they don’t include. Most glaringly, there’s no meaningful investment in financial education. While the government launches marketing campaigns to encourage investing, it offers no new resources to help people understand what they’re being sold.
There’s also no action on the high fees that plague the UK investment industry. Platform charges, fund management fees, and advisory costs continue to eat into returns, yet the reforms don’t do anything to promote transparency or drive down costs.
The missing elements reveal the true priorities behind the Leeds Reforms. This isn’t about democratising investment or building long-term wealth for ordinary people. It’s about channelling more money through an industry that profits from complexity, opacity, and high charges.
What you can do to protect yourself
These risks are real, but that doesn’t mean you’re powerless. Here’s how to protect yourself amid the reforms.
The Leeds Reforms are rolling out whether you like them or not, but you don’t have to be a passive victim.
Prepare for investment sales calls. When your bank calls offering “targeted support,” prepare three key questions: What are the total annual costs? Can I exit this investment easily if my circumstances change? What evidence do you have that this will outperform a low-cost index fund over 20 years? If they can’t answer clearly and immediately, end the conversation.
Audit your pension’s private equity exposure. Request your pension scheme’s annual report and look for mentions of “alternative investments,” “private equity,” or “illiquid assets.” Many workplace schemes offer multiple investment options – you might be able to opt for a simpler, lower-cost portfolio that avoids these expensive alternatives.
Use the Financial Ombudsman while it still has teeth. If you have disputes with financial companies, escalate sooner rather than later. The reforms will reduce compensation rates significantly. Document everything meticulously.
Be extra cautious about mortgage borrowing. The reforms will make it easier to borrow larger amounts, but resist the temptation to borrow at maximum multiples. Consider what would happen if interest rates rose by 2-3 percentage points.
Diversify your banking relationships. As ring-fencing protections weaken, spread your financial relationships across multiple institutions. Consider using smaller building societies or credit unions for some savings; they’re often more conservative and less likely to gamble with your deposits.
Conclusion
Remember that cheerful phone call about investment opportunities? In the months ahead, millions more will receive similar calls. The banks will be enthusiastic, the marketing slick, the promises enticing. But behind the friendly voice lies a fundamental shift in how financial services operate in Britain.
The original “Tell Sid” campaign succeeded because it offered something genuinely simple: shares in a utility everyone understood. The Leeds Reforms invoke that same nostalgic appeal while shepherding savers into a labyrinth of private equity, alternative investments, and weakened consumer protections.
Yes, the reforms contain genuinely positive elements. Encouraging people to move from cash into diversified equity investments makes sense. Improving risk warnings to inform rather than frighten represents helpful progress. But these benefits are overwhelmed by the systematic erosion of safeguards, the push towards expensive private investments, and the transformation of trusted institutions into product sellers.
In this environment, working with a financial planning firm that takes an evidence-based approach becomes more valuable than ever. Rather than exposing you to risky, opaque, and costly investments like private equity, such firms focus on simple, transparent, low-cost strategies that have been proven to work over the long term. If you’re concerned about navigating these changes to your financial advantage, consider seeking independent guidance from advice firms like our own who prioritise your best interests over selling products.
The real test of the Leeds Reforms won’t be whether they boost economic growth in the short term. It will be whether they help ordinary people build genuine long-term wealth, or whether they simply transfer more money from savers’ pockets to financial firms’ profit margins.
If the goal is long-term wealth for ordinary people, the Leeds Reforms are, at best, a missed opportunity, and at worst a Trojan horse for the industry’s own agenda.
Photo: Lauren Hurley / No 10 Downing Street – licensed under the Open Government Licence v3.0
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