Mansion House gives Rachel Reeves a chance to change the course
Rachel Reeves has a chance to move from ambition to action with this year’s Mansion House Speech. Lets hope she takes it, writes David Postings
When I attended last year’s Mansion House speech it was fantastic to hear Chancellor Rachel Reeves say that the UK had become too cautious, with a regulatory environment that prioritised eliminating risk over enabling growth.
This year’s speech and the accompanying Financial Services Growth and Competitiveness Strategy are the opportunity for Reeves to build on that, taking us from ambition to action.
We’ve seen important early steps – from the long-overdue review of the Financial Ombudsman Service to the decision to fold the Payment Systems Regulator into the Financial Conduct Authority and the commitment to reduce the cost of regulation by 25 per cent.
UK Finance has also been engaging extensively with the government and set out a range of ideas that we hope will be taken forward.
What can we expect from Rachel Reeves’s Mansion House speech?
The government has said that capital markets will be a key part of the new financial services strategy. This is strongly welcome as the ambitious reform agenda of the last five years has helped to deliver valuable change; however, many of the proposals are yet to be fully implemented, which is holding back the full wealth-creating potential of our markets.
We are also expecting further news around reform of the Financial Ombudsman Service (FOS). The government will hopefully set out how the Ombudsman and the FCA will work together to stop the FOS acting as a quasi-regulator and also put in place a time limit on complaints. Providing certainty and stability will better allow firms to innovate in the interest of consumers.
Capital requirements is another important area to kick start growth. While the principles of safety and soundness remain paramount, there is a risk that conservative interpretations of global standards are holding back vital growth-driving activities such as SME lending. Ideally the government will use its new strategy to reinforce the importance of supporting economic growth through more proportionate capital rules.
On open banking and digital payments, we are at a crossroads. The UK has the ingredients for a world-leading system, but the overall direction for industry remains unclear. The investment needed to deliver tangible outcomes for consumers and businesses will only flow if there is a clear strategic roadmap and stronger industry involvement supported by a sustainable commercial model.
Finally, there is the issue of how best to encourage retail investment. That is an important and finely balanced debate and the ambition to deliver a stronger investment culture is right, but we need to create positive reasons to support investment. We believe there should be a greater focus on delivering financial education, increasing the provision of financial advice and removing disincentives to investment in UK equities.
This year’s Mansion House speech offers Reeves a golden opportunity to move from growth ambition to action.
I hope the speech and the new financial services strategy allows us to take a careful but decisive move away from risk aversion towards ensuring the UK has better balance and an internationally competitive approach to regulation.
This will enable the financial services sector to better help UK businesses, consumers and the government’s growth mission. Something we all fervently support.
David Postings is chief executive of UK Finance