The UK Chancellor has announced their plans to introduce a suite of reforms to ensure the growth and development of the region’s financial services sector. Through this initiative, the Chancellor is set to institute reforms that focus on advancing and increasing competitiveness in financial services, with them claiming that regulatory modifications to mitigate risk after the financial crisis went too far and led to unplanned consequences.

As part of the first Mansion House speech, the Chancellor mentioned that the UK’s status as a global financial hub should not be taken for granted, arguing that even if the region aims to maintain upholding high standards, the system that has been developed seeks to eradicate risk takings and halts economic growth. The Chancellor’s plans As part of their strategy, the Chancellor is set to outline a strategy to rebuild and rebalance the system, focusing on enabling the financial sector to innovate, expand, and benefit from the opportunities offered by investment in business, infrastructure, and clean energy across Britain. Among the upcoming initiatives, officials mentioned setting additional growth-centred remits for financial service regulators, the publication of the first Financial Services Growth and Competitiveness Strategy in 2025, and developing pension funds to scale investment so that UK individuals can also benefit from progress.

Furthermore, even if the UK’s regulatory model for the financial services sector is known globally, reform is required to further support innovation, scale investment, and provide sustainable economic advancement. The Chancellor intends to keep high regulatory standards, however, they seek to change parts of it to rebalance competitiveness and development. In addition, the Financial Conduct Authority, Prudential Regulation Committee, Financial Policy Committee, and Payment Systems Regulator have been contacted to ensure a scaled focus on assisting economic expansion.

Other initiatives Among the package of reforms, the UK Chancellor also mentions: Modernise the Financial Ombudsman Service framework to allow it to continue to have a critical role for consumers to get redress while providing transparent expectations regarding decisions for both individuals and financial services companies; Consultations on replacing the current Certification Regime with a more proportionate approach that minimises costs; Combat fraud by involving tech and communication sectors and urging them to focus their efforts on reducing the scale of fraudulent activities conducted on platforms and networks; Publish a National Payments Vision and bolster the UK’s capital markets by committing to legislate to develop PISCES by May 2025; Introducing a pilot to offer a Digital Gilt Instrument, utilising distributed ledger technology (DLT); Launching a new framework for UK-based captive insurance companies to allow the insurance market to become more attractive for businesses wanting to implement risk solutions. Moreover, the government is set to propose centring on five priority expansion opportunities in the financial services sector to leverage the UK’s existing capabilities and maximise the potential for development. The Chancellor mentions fintech, sustainable finance, asset management and wholesale services, insurance and reinsurance, and capital markets.

Additionally, regarding the pension system, the UK aims to publish two consultations before the Pension Scheme Bill in Spring 2025 to combine defined contribution pension schemes and the Local Government Pension Scheme in England and Wales into mega funds. The British Growth Partnership receives the support of two UK pension funds for the upcoming launch, including Aegon UK and NatWest Cushon. Recognising the role of the mutual and cooperative sector in scaling inclusive growth across the UK, the government intends to launch a package to unlock the potential of the industry, including publishing a call for evidence on reform to credit union common bonds in Great Britain, writing to the Financial Conduct Authority and Prudential Regulation Authority to come up with a report on the mutuals landscape in 2025, and welcoming the creation of a Mutual and Co-operative Business Council.

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