The Notebook: If Reeves wants the City onside, she must be clear on her vision
Where the City’s movers and shakers have their say. Today, it’s Lucy McNulty, editor of the Following the Rules podcast, with the pen, talking Treasury-City relations, buy now, pay later, and her pick of the podcasts
The City needs a clear vision
The decision by Chancellor Rachel Reeves to create a Treasury unit focused on fostering relations with financial services firms has obviously been welcomed. The new team should start by providing the City and its regulators with a clearer vision for the future.
City bosses have been growing increasingly concerned in recent weeks over what they see as tensions between the government’s pro-growth agenda and its commitments to better protect consumers.
It’s now time to clarify where priorities lie. After all, it is not possible to run a risk-free, pro-growth agenda.
A vision statement outlining how the government views the nature and volume of risk it is prepared to accept, and where the equilibrium point is, would help make City bosses open to supporting their vision plan accordingly.
Such a statement could also detail where Labour believes regulators are aligned to its vision, thereby providing City watchdogs with some much-needed insight into how lawmakers view their priorities. That would be particularly welcomed by the UK’s Financial Conduct Authority which found itself subject to repeated attacks from the previous government over its approach to a new secondary legal objective to promote growth and competitiveness in the UK.
Former regulator Gavin Stewart told the Following the Rules podcast recently that this new growth duty “comes up so often in the political rhetoric that regulators could be forgiven for thinking that actually it’s what the government cares about most”.
And yet our watchdogs’ primary duty remains promoting well-functioning financial markets so that consumers get a fair deal.
Labour ministers have indicated they support the growth duty but if it is to be effective they must clarify how they envisage regulators adhering to it. After all, City regulators may be operationally independent of government, but their objectives are still set by it.
Promoting a City as both pro-growth and pro-consumer was always going to require a balancing act. Such balance may be unattainable if our government, the City and its regulators are not aligned in their approach to those goals.
Buy now, regulate later
In her role as shadow City minister, Tulip Siddiq repeatedly pushed her Conservative predecessors to move faster to protect consumers using increasingly popular but unregulated app-based loan products known as buy now, pay later. So it disappointed many that the new government did not announce plans to introduce such protections on kickstarting its new administration.
The measures originally put forward by previous Conservative governments had broad support amongst the industry and consumer groups. And City watchdogs had begun gearing up for their introduction.
A 2023 study from the FCA found that around 14m people have used these products to buy something in the first six months of last year. And the data provider Statista estimates that the market grew another 15 per cent from 2023 to 2024 making the UK one of the biggest markets in Europe.
And yet measures to safeguard the product’s users appear to be once again on hold.
“There’s a gap in the system,” former regulator Gavin Stewart told the Following the Rules podcast. “Let’s fix it.”
Quite. What are we waiting for here?
Tabs on texting
City bosses under pressure to not to lose track of their regulated employees’ communications could follow the lead of Ben Chrnelich, president of comms platform Symphony. Keen to discover surveillance blind spots, he makes a point of asking his summer interns to list the apps they’re using to communicate with each other. Each year, he says, the list “just goes on and on and on”.
“Almost every application has some way of communicating,” he adds.
Forewarned is forearmed, right?
Quote of the week
We would encourage anyone who hasn’t picked up a book or audiobook in a while… to use this summer break to kick-start their reading habit.
Karen Napier, CEO of Reading Agency, on the findings of a recent study commissioned by the charity which found that half of UK adults do not regularly read for pleasure.
What I’ve been listening to
As someone whose career rides on my ability to communicate clearly, I was drawn to this new podcast series from acclaimed BBC journalist Ros Atkins. Billed as a series that will provide its listeners with practical advice for effective everyday communication, it does not disappoint. The show delivers a diverse range of tips for honing your communication skills from experts across a range of fields, including comic Rob Brydon, a former White House speechwriter and personal finance campaigner Martin Lewis, in a series of very accessible 15-minute episodes. At a time when communication methods and styles are rapidly evolving, and the opportunities to misspeak are ever-increasing, this series provides the guidance we all need to get ahead.