This review is a key part of the Chancellor’s Leeds Reforms, with a clear objective to ensure the UK’s capital framework supports growth, competitiveness and financial stability. 

In December 2025, the FPC judged that UK banks are well-capitalised and lowered its system-wide Tier 1 benchmark from 14% to 13% of risk-weighted assets. This was a welcome sign of confidence, but in itself does not translate into lower requirements for individual banks and therefore lending capacity into the real economy.

Getting the right approach here is one of the most effective ways to unlock additional lending to households and businesses.

Our approach

Our submission sets out various areas that we believe the UK need to focus on, including:

• Translating the revised benchmark into reduced requirements: by implementing the FPC’s revised capital benchmark for firms’ actual requirements.
• Addressing overcapitalisation caused by various domestic buffers: which target the same underlying domestic lending risks. 
• Reforming the leverage ratio: and returning it to its intended backstop role as the current UK approach goes beyond Basel standards and constrains lower-risk lending. 

Supporting the real economy

These are a package of targeted reforms to the UK’s capital framework that would retain the key safeguards of the post financial crisis regime, while removing over capitalisation where it no longer adds materially to resilience.

They would also enable banks to play a fuller role in supporting growth across the economy – from helping more SMEs invest and scale, to improving access to mortgages for households, and increasing the capacity to finance infrastructure and the net zero transition.