RACHEL Reeves will pledge to rip up financial red tape in a major speech, arguing that regulatory changes following the 2008 economic crash have “gone too far”.
The Chancellor will use her first Mansion House address to say that measures brought in since the crisis to “eliminate risk” have had “unintended consequences” in holding back growth.
Speaking in the City of London, Reeves is expected to announce a package of reforms aimed at driving competition across financial services.
This will include sending “growth-focused remit letters” to regulators and overhauling the system for consumer redress aimed at giving customers and businesses “clearer expectations” about the compensation landscape in the future, the Treasury said.
Reeves has written to the Financial Conduct Authority, Prudential Regulation Committee, Financial Policy Committee and Payment Systems Regulator to underscore the importance of this focus.
She is expected to announce plans for pension “megafunds” which could result in around £80 billion to invest in businesses and infrastructure.
It is believed she will also say the financial services sector is “the crown jewel in our economy” and “a global success story: we are the second exporter of financial services in the G7”.
She is set to say: “But we cannot take the UK’s status as a global financial centre for granted.
“In a highly competitive world we need to earn that status and we need to work to keep it.”
Reeves (below) will add: “While it was right that successive governments made regulatory changes after the global financial crisis to ensure that regulation kept pace with the global economy of the time, it is important that we learn the lessons of the past.
“These changes have resulted in a system which sought to eliminate risk-taking. That has gone too far and, in places, it has had unintended consequences which we must now address.”
The Treasury said “high regulatory standards will be maintained” but parts of the system will be “rebalanced to drive economic growth and competitiveness”.
Reeves will announce plans to “modernise” the Financial Ombudsman Service, which deals with complaints between consumers and firms, as part of the shakeup.
The Government will also consult on replacing the Certification Regime, which seeks to strengthen market integrity and applies to staff below senior management level, with a more “proportionate” approach that cuts costs so firms can “focus on growth, the Treasury said.
The Chancellor, Home Secretary and Technology Secretary have also written to tech and telecommunication sectors calling for them to go further and faster in reducing the scale of fraud taking place on their platforms and networks.
A progress update of an expanded fraud strategy by March 2025 has also been requested.
Reeves will also commit the Government to publishing the first ever Financial Services Growth and Competitiveness Strategy in the spring, which is aimed at providing long-term certainty for the sector.
She will propose focusing on five priority areas in financial services to take advantage of the UK’s existing strengths and boost the potential for growth.
These will be FinTech (financial technology), sustainable finance, asset management and wholesale services, insurance and reinsurance and capital markets.
The Chancellor will conclude: “The changes I have set out today will drive growth and competitiveness through investment and through reform.
“A long-term strategy to harness the strengths of the financial services sector: making the UK a global leader in sustainable finance, developing the right approach to redress to reduce uncertainty, reinvigorating our capital markets by unlocking private investment through our pension funds and reforming our approach to regulation to make it more dynamic and more competitive.
“Taken together, these measures represent the most pro-growth financial services package since the financial crisis.”
