Growth, growth, growth was the central message of the Chancellor’s Mansion House speech on 14 November.
Rachel Reeves wants to encourage growth by supporting greater investment, particularly in infrastructure. The speech came shortly after the government’s International Investment Summit which the government says saw £63bn of investment flow into the UK.
The Chancellor picked out the potential for deepening the economic relationship with the US on areas such as emerging technologies. While she said that the government would not be reversing Brexit or re-entering the single market or customs union, she said that the relationship with the EU must be reset.
In addition to the push on investment, the Chancellor also signalled a shift on the approach that regulators should take. Here is a key excerpt on that:
“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…
… but 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 that we must now address.”
Alongside the Mansion House speech, the Chancellor published new “growth-focused” remit letters to the FCA, the Prudential Regulation Committee, the Monetary Policy Committee, the Financial Policy Committee and the PSR. HM Treasury has also launched a call for evidence on the Financial Services Growth and Competitiveness Strategy.
A transcript of the Chancellor’s speech is available here and it can be viewed here. The Governor of the Bank of England also gave a speech, entitled “growth”, at the same dinner and which is available here.
Set out below are more details of the Chancellor’s speech and the documents published alongside it.
Pensions investment reform
The interim report of the Pensions Investment Review was published, focusing on creating large “megafunds” in defined contribution and local government pension schemes to drive investment in productive assets and deliver greater returns for members. The government has launched a consultation on its proposals to legislate for a minimum size and maximum number of defined contribution pension scheme default funds.
National Infrastructure and Strategic Assets (NISTA) and 10-year infrastructure strategy
The government is creating National Infrastructure and Strategic Assets (NISTA) and will publish a ten-year infrastructure strategy to ensure to ensure that there is a pipeline of projects to attract that investment.
British Growth Partnership
The government will provide a cornerstone investment, along with Aegon UK and Natwest Cushion, to allow the British Business Bank to launch the British Growth Partnership, encouraging more UK pension fund investment into the UK’s fastest growing, most innovative companies.
Private Intermittent Securities and Capital Exchange System (PISCES)
The Chancellor said that the government would legislate to establish PISCES, a private shares trading platform, by May 2025. The draft legislation is available here.
Reform of the Financial Ombudsman Service (FOS)
The FCA and FOS have published a joint call for input “to seek views on how to modernise the redress system, so it better serves consumers and provides greater stability for firms to invest and innovate”. Particular areas of focus for the call for input are mass redress events and the role played by personal representatives (such as claims management companies and solicitors).
Financial advice
The Chancellor said “while regulation has been successful in improving the quality of financial advice being offered to consumers…many people do not get the help with their finances that they want and need…so the FCA will shortly consult on transformational changes to financial advice and guidance to ensure that people get the right support.”
The FCA published a “Stakeholder Update” on its Advice Guidance Boundary review stating that it plans to consult on high-level proposals for targeted support for pension savers in December 2024 and rules for better support for consumers in retail investments and pensions in the first half of 2025.
Senior Managers and Certification Regime
The Chancellor said, “while the Senior Managers and Certification Regime has helped to improve standards and accountability…some elements of it have become overly costly and administratively burdensome. So the Treasury, the FCA and the PRA will shortly publish the outcomes of our review…including a commitment to consult on removing the current Certification Regime from legislation”.
The HM Treasury press release says that the Certification Regime would be “replaced with a more proportionate approach that reduces costs and frees up businesses to focus on growth”.
National Payments Vision
HM Treasury published its National Payments Vision (NPV), setting out its ambitions for the UK’s payments sector. Key focuses of the vision are innovation and growth. There are a wide range of areas covered by the NPV but we would especially highlight the following:
- Regulatory co-ordination: The NPV recognises the “regulatory congestion” identified in the Garner review, namely that the raft of initiatives and rule sets being introduced by three different regulators (FCA, BoE and PSR) as well as from industry and government, has often led to overlapping requirements and a significant compliance burden on the sector. The government seeks to solve this issue through improved coordination between regulators and the set up of a “Vision Engagement Group” to facilitate enhanced collaboration between government, regulators and industry.
- Strategic decisions and Pay.UK: The government considers that it needs to take a greater role in strategic decisions around payments infrastructure in the short to medium term. It is recommending a more agile and flexible approach to delivering the UK’s infrastructure needs, and has asked the BoE and the PSR, via the Payments Vision Delivery Committee, to examine and refresh the requirements for the UK’s retail infrastructure. This will include proposals to reform Pay.UK, acknowledging the frustration the industry has experienced with Pay.UK, and a review of regulatory congestion around investment into competing infrastructure initiatives.
- Open Banking: The government calls on the FCA and PSR to consider their commitment to developing Open Banking to drive delivery of seamless and ubiquitous account-to-account payments. In particular, the government mentioned the need to unlock variable recurring payments for e-commerce in the short term, the creation of a sustainable commercial model to facilitate innovation and investment and consumer protections, especially in the form of a dispute resolution process
Sustainable finance reforms
The government announced a host of reforms on sustainable finance including:
- Regulation of ESG ratings providers: HM Treasury published draft legislation for the regulation of ESG ratings providers.
- UK green taxonomy: HM Treasury published a consultation to explore the need for a framework to classify green investments.
- Voluntary Carbon and Nature Markets (VCNMs): The Department for Energy Security and Net Zero published principles to guide responsible participation in voluntary markets for buying and selling carbon and nature credits. In early 2025, it will issue a public consultation to seek views on the steps the government could take to raise the integrity and use of VCNMs and on the proposed implementation of the principles.
- Aligning economically significant companies with future UK Sustainability Reporting Standards: The HM Treasury press release said that it would commit to consulting on economically significant companies disclosing information using future UK Sustainability Reporting Standards
Revising UK MiFID II
HM Treasury published a policy paper on revising certain aspects of UK MiFID II, including:
- Fuller powers of direction in relation to the reporting of OTC positions in response to the events in the Nickel market in March 2022.
- To commence the revocation of firm-facing requirements in the UK Markets in Financial Instruments Regulation (MiFIR) that pertain to transaction reporting, and delegate the setting of a new regime to the FCA.
- To revoke the firm-facing regulations within the UK MiFID Organisational Regulation so that they can be replaced in the FCA’s handbook.
Remuneration reforms
The Chancellor said “as the PRA have acknowledged… post-crisis pay structures made the UK an international outlier on deferral arrangements…so we will support their intention to consult on reducing the length of pay deferrals…helping firms to attract and retain talent.” The CEO of the PRA previously spoke about this issue in a speech on 17 October 2024.
Captive insurance
HM Treasury published a consultation on the potential for a new approach to captive insurance companies, with the aim of supporting the competitiveness of the UK. insurance sector.
Mutuals and credit unions
The Economic Secretary to the Treasury, Tulip Siddiq MP, has written letters to the CEOs of the FCA and PRA requesting the regulators consider producing a report assessing the current mutuals landscape before the end of 2025.
HM Treasury has published a consultation on proposed reforms to the common bond rules for credit unions, enabling more flexible membership criteria.
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