In her first Mansion House speech, Chancellor Rachel Reeves will tonight outline a package of reforms aimed at driving growth and competitiveness in the UK’s financial services industry.
Reeves will argue that while the UK has maintained high regulatory standards since the financial crisis, the system has gone too far in eliminating risk-taking, leading to unintended consequences that are holding back economic growth.
“The UK has been regulating for risk, but not regulating for growth,” Reeves will say in her speech. “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.”
To rebalance the system, Reeves will announce plans to set new growth-focused remits for financial regulators, publish the first-ever Financial Services Growth and Competitiveness Strategy, and create “pension mega funds” to boost investment.
The Chancellor will also outline reforms to the Financial Ombudsman Service, the Certification Regime, and efforts to combat financial fraud. Additionally, the government will launch initiatives to drive innovation in payments and capital markets, as well as consult on a new framework for UK-based captive insurance companies.
“The changes I have set out today will drive growth and competitiveness through investment and through reform,” Reeves will say. “Taken together, these measures represent the most pro-growth financial services package since the financial crisis.”
The announcement comes as the UK seeks to cement its status as a global financial hub in the face of intense international competition. Reeves will warn that the UK’s dominance “cannot be taken for granted” and that the country must work to “earn that status and…keep it.”
To that end, the government will publish a strategy focused on five key growth areas: FinTech, sustainable finance, asset management, insurance and reinsurance, and capital markets. It will also seek to strengthen partnerships with other major financial centres around the world.
Alongside the regulatory reforms, the Chancellor will unveil plans to unlock investment through the pension system and sustainable finance initiatives. This includes merging pension schemes into “mega-funds” to boost investment in businesses, infrastructure and clean energy.
The Treasury will also publish draft legislation to regulate ESG rating providers, consult on a UK Green Taxonomy, and launch principles for voluntary carbon and nature markets – all part of efforts to establish the UK as a global leader in sustainable finance.
“The changes I have set out today will drive growth and competitiveness through investment and through reform,” Reeves will conclude. “This represents the most pro-growth financial services package since the financial crisis.”
