Rachel Reeves is unveiling a shake up of Britain’s financial services sector and regulation to promote growth and prevent the City’s decline as a global financial centre
Speaking at the Mansion House - the Lord Mayor of London’s official residence - in the heart of the Square Mile, the Chancellor is telling the City that regulatory changes put in place eliminate risk after the financial crisis have “gone too far” and are stifling innovation and growth.
In her speech she says: “The UK has been regulating for risk, but not regulating for growth.”
Reforms will include new growth-focused remits for financial service regulators, the Financial Conduct Authority, Prudential Regulation Committee, the Financial Policy Committee and the Payment Systems Regulator; the publication next year of the first Financial Services Growth and Competitiveness Strategy, and the creation of pension mega funds to boost investment.
In the traditional annual address, one of the most glittering events of the City’s calendar she says: “Before we came into government, I was clear that the financial services sector must play a central part in our economic vision and our plan for economic growth.
“Because I know that this sector is the crown jewel in our economy. It employs 1.2m people, from London to Edinburgh, and from Manchester to Belfast. It is one of the country’s largest and most productive sectors, accounting for 9% of our economic output.
“And it is a global success story: we are the second largest exporter of financial services in the G7.
“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.”
She goes on: “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.”
She added: “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 ser-vices package since the financial crisis.”
The Government will also consult on replacing the current Certification Regime, which applies to staff below senior management level, with a more light touch approach that reduces costs
The government will launch a pilot to deliver a Digital Gilt Instrument, using distributed ledger technology (DLT)..
There will also be consultation on introducing a new framework for UK-based captive insurance companies to make the UK insurance market a more attractive hub for businesses seeking efficient risk solutions.
Two consultations will be published ahead of the Pension Schemes Bill in the Spring to merge public sector pension schemes into megafunds mirroring those in Australia and Canada..
