Rachel Reeves to 'rip up financial red tape' with pension 'mega funds' freeing up £80 billion for investment
14 November 2024, 18:06
Rachel Reeves looks set to "rip up financial red tape" as she introduces all-new pensions "mega funds' that could free up £80 billion for potential investment.
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The Chancellor will use her first Mansion House address on Friday to tell the City of London that measures brought in following the 2008 economic crash have "gone too far".
Reeves is expected to say that regulations designed to "eliminate risk" have had "unintended consequences" by holding back UK growth.
Speaking on Friday, Ms Reeves is expected to announce a package of reforms aimed at driving competition across financial services.
Ms Reeves has written to the Financial Conduct Authority, Prudential Regulation Committee, Financial Policy Committee and Payment Systems Regulator to push for a greater focus on growth.
The proposed pension "mega funds" could see around £80 billion freed up to invest in UK businesses and infrastructure.
The Chancellor will describe the financial services sector as "the crown jewel in our economy" and "a global success story: we are the second exporter of financial services in the G7".
"But we cannot take the UK's status as a global financial centre for granted," she will add.
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"In a highly competitive world we need to earn that status and we need to work to keep it."
Ms Reeves will add: "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.
"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 which we must now address."
The Treasury said "high regulatory standards will be maintained" but parts of the system will be "rebalanced to drive economic growth and competitiveness".
Ms Reeves will announce plans to "modernise" the Financial Ombudsman Service, which deals with complaints between consumers and firms, as part of the shakeup.
Meanwhile, a pilot scheme will be launched to deliver "digital gilts" - tokenised Government bonds that are issued on a blockchain - in a move to better embrace technology.
The Government will also consult on replacing the certification regime, which seeks to strengthen market integrity and applies to staff below senior management level, with a more "proportionate" approach that cuts costs so firms can "focus on growth, the Treasury said.
The Chancellor, Home Secretary and Technology Secretary have also written to tech and telecommunication sectors calling for tougher action in reducing the scale of fraud taking place on their platforms and networks.
A progress update has also been requested by March 2025 ahead of an expanded fraud strategy.
Ms Reeves will also commit the Government to publishing the first ever Financial Services Growth and Competitiveness Strategy in the spring, which is aimed at providing long-term certainty for the sector.
She will propose focusing on five priority areas in financial services to take advantage of the UK's existing strengths and boost the potential for growth.
These will be financial technology, sustainable finance, asset management and wholesale services, insurance and reinsurance and capital markets.
