It’s all about the Opportunity
The Chancellor wants to change the narrative to get Britain growing. According to last week’s Mansion House speech and the raft of documents from the Treasury that we have seen since, she wants us all to take more risks. Rather than discussing risks, let’s focus on opportunities.
We can see the benefits of buying a first home. We want to live somewhere, but Government and industry are not good at explaining opportunities across financial services. We make it too complicated and frightening rather than attracting people. How can we best market opportunities to mortgagees, banks, financial institutions, investors, and the underlying companies and projects in which we are investing? Something to think about over the summer when the focus is going to continue to be on fiscal stability, taxes, and spending before the next budget.
Below is a summary of the areas we, at 5654, have identified where financial services companies could affect policy.
Regulatory Environment Focus: The government is committed to delivering a regulatory environment that is proportionate, predictable, and internationally competitive, recognizing its crucial role in the growth and competitiveness of the financial services sector. This overarching goal could lead to a more stable and efficient market for investments.
Financial Ombudsman Service (FOS) Reforms: There are proposed legislative changes to the FOS framework to restore its role as a simple, impartial dispute resolution service and ensure it is no longer acting as a quasi-regulator. This includes adapting the "Fair and Reasonable" test, introducing mechanisms for the FOS to seek the FCA’s views on rule interpretation, and an absolute time limit of 10 years for bringing complaints to the FOS. While FOS primarily handles individual complaints, a more predictable and consistent redress framework could indirectly benefit financial services firms and the broader investment landscape in which pooled LGPS funds operate.
Senior Managers and Certification Regime (SM&CR) Streamlining: The government is committed to radically streamlining the SM&CR to reduce regulatory burdens on firms by 50%. This could lead to more efficient operations for financial services firms with which LGPS funds interact.
Faster Regulatory Approvals: The government will set new, shorter deadlines for determining regulatory applications for new firm authorisations, variations of permission, and senior manager approvals. This could potentially support faster entry of new or innovative financial entities into the market, possibly broadening investment opportunities.
Digitalisation and Innovation: The government aims to make the UK the world's most technologically advanced global financial centre, which includes:
Publishing a Wholesale Financial Markets Digital Strategy (WFMDS) to digitalize UK wholesale markets, aiming to optimize and transform markets, reduce inefficiencies, and support new forms of asset issuance and ownership.
Advancing work on Open Finance and Smart Data, which could lead to new ways for financial services to operate and potentially new data-driven investment insights.
Modernizing payments assimilated law and exploring concepts like a digital pound and regulating stablecoins, which could impact how transactions are conducted in the financial markets. These changes contribute to a more modern and efficient financial market, which could benefit LGPS funds through improved liquidity and access to diverse financial instruments.
Capital Framework for Banks: The government, Bank of England, and PRA are taking steps to tailor the capital framework for banks to focus on growth, including implementing Basel 3.1 standards. The Financial Policy Committee will also review its assessment of capital levels needed for UK financial stability. While focused on banks, a stable and growing financial system underpins the wider economy and investment opportunities for LGPS funds.
5654 supports organisations to manage complex policy and regulatory environments, including financial services organisations. If you have any questions, please get in touch with hello@5654.co.uk