Greg Kilminster
Head of Product - Content
Chancellor’s Mansion House speech: a vision for growth and reform
The Chancellor of the Exchequer Rachel Reeves has outlined a comprehensive strategy to revitalise the UK's financial services sector and position it as a global financial powerhouse. By focusing on economic stability, increased investment, and regulatory reform, the government aims to unlock the sector's full potential and drive sustainable growth.
Laying the groundwork: economic stability and public investment
Reeves emphasised the importance of fiscal discipline and sound economic management as the foundation for a thriving economy. By restoring stability to public finances, the government aims to create a conducive environment for business and investment. To further stimulate economic growth, the government will significantly increase public investment in key sectors, such as infrastructure, to create jobs and drive productivity.
Revitalising the financial services sector: a multi-pronged approach
The Chancellor outlined a series of measures to revitalse the UK's financial services sector, including:
- Pension reform: The government will implement ambitious reforms to the UK's pension system, including the creation of "megafunds" to unlock significant investment potential. This will enable pension funds to invest more in productive assets, such as infrastructure and private equity, boosting economic growth and improving returns for savers.
- Regulatory reform: The government will streamline the regulatory framework to reduce unnecessary burdens on businesses and promote innovation. This includes simplifying the Senior Managers and Certification Regime and reforming the approach to redress.
- International focus: The UK will continue to engage with global partners, including the US and EU, to strengthen economic ties and attract international investment. The government will also focus on emerging markets and seek to deepen economic relationships with countries like India and China.
Supporting innovation and growth: A catalyst for the future
Key initiatives mentioned in the speech include:
- Fintech: The government will continue to support the growth of the UK's fintech sector, fostering innovation and attracting investment.
- Green Finance: The UK aims to become a global leader in green finance, supporting the transition to a low-carbon economy and attracting sustainable investment.
- Capital Markets: The government will take steps to improve the UK's capital markets, making it easier for companies to raise capital and grow.
- By implementing these policy initiatives, the UK government aims to create a thriving financial services sector that drives economic growth, creates jobs, and improves living standards for all.
Additional considerations
Beyond the specific policy initiatives outlined in the speech, Reeves noted the government's success in revitalising the UK's financial services sector will depend on several key factors:
- International cooperation: Maintaining strong relationships with key global financial centres, such as New York and Frankfurt, will be crucial.
- Talent and skills: Attracting and retaining top talent in the financial services sector will be essential for the UK's competitiveness.
- Technological innovation: Embracing technological advancements, such as artificial intelligence and blockchain, will be key to driving innovation and efficiency.
- Risk management: Ensuring robust risk management practices and maintaining financial stability will be paramount.
On the back of the speech, the UK government published several consultations and calls for evidence to facilitate the initiatives presented. These are covered below.
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National Payments Vision: HM Treasury outlines roadmap for UK payments ecosystem
HM Treasury has published the National Payments Vision, a strategic framework aimed at ensuring the UK remains a world leader in payments innovation, resilience, and security. This initiative outlines a pathway for upgrading the nation’s payments infrastructure, fostering competition, and delivering enhanced consumer protections.
Some context
The UK’s payments sector plays a vital role in the economy, processing over 48 billion transactions annually. While historically a global leader in payments innovation, the Future of Payments Review from July 2023 (the Garner review) highlighted risks of the UK falling behind international peers due to regulatory congestion and a lack of strategic direction.
Emerging technologies such as distributed ledger technology (DLT), artificial intelligence, and central bank digital currencies (CBDCs) present significant opportunities to transform payments. However, to remain competitive, the UK must modernise its infrastructure and regulatory approach.
Key takeaways
Strengthening today’s foundations
- Clearer regulation: The government has issued a joint remit letter to the FCA and Payment Systems Regulator (PSR) to streamline coordination and reduce regulatory overlaps, especially on fraud policy.
- Resilient infrastructure: The Faster Payments System, launched in 2008, needs upgrading to better support innovation, including exploring account-to-account payments.
Driving innovation and competition
- Open banking: The paper emphasises Open Banking’s potential for account-to-account payments, with a focus on delivering seamless e-commerce transactions. The FCA will lead on developing a long-term regulatory framework for Open Banking.
- Exploring digital payments: Initiatives such as a potential retail Central Bank Digital Currency (the digital pound) are being explored to ensure the UK’s payment landscape evolves with next-generation technology.
Enhancing security
- Fraud reduction: Tackling payment fraud remains a priority, with measures such as mandatory reimbursement for authorised push payment fraud and better intelligence sharing between financial institutions.
- Digital identity: The introduction of trusted digital verification services is being encouraged to enhance security and streamline payments.
Governance reforms
- Payments Vision Delivery Committee: A new committee, chaired by HM Treasury, will oversee the implementation of the vision, supported by a broad engagement group to ensure alignment with stakeholder needs.
- Pay.UK reform: Governance and funding models for the UK’s payments infrastructure operator are under review to enable swifter, more strategic decision-making.
Next steps
The government will collaborate with regulators, industry stakeholders, and consumer representatives to deliver the vision. Key actions include:
- Publishing a Payments Forward Plan to streamline regulatory initiatives.
- Accelerating upgrades to retail payment infrastructure by mid-2025.
- Continuing research on the digital pound and other innovations, with decisions subject to further consultation and legislative scrutiny.
This vision reflects the government’s stated commitment to ensuring the UK’s payments ecosystem underpins economic growth, technological leadership, and global competitiveness. Stakeholders are encouraged to engage with HM Treasury to shape the future of payments in the UK.
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HM Treasury launches call for evidence on credit union common bond reform
HM Treasury has issued a call for evidence to review the common bond requirements that underpin these member-owned financial institutions. The consultation reflects the government’s stated commitment to supporting the growth and sustainability of the mutuals sector.
The review seeks to assess whether the current common bond requirements remain fit for purpose and whether reforms could unlock further growth opportunities for credit unions.
Key areas of consultation
- The call for evidence focuses on the following:
- Assessment of the common bond: Stakeholders are invited to provide input on whether the definition and requirements of common bonds adequately support credit union operations.
- Impact on sector growth: Feedback is sought on how the common bond framework affects the credit union sector's ability to expand its member base and services.
- Broader market implications: Respondents are encouraged to share views on how potential changes could affect the savings and loans market, including competition and consumer choice.
Rationale for reform
With 232 credit unions in Great Britain serving 1.5 million members and managing a combined income of £72.36 million, credit unions play a vital role in promoting financial inclusion. Modernising the common bond framework is intended to:
- Enhance credit union growth potential.
- Improve financial accessibility for underserved communities.
- Ensure the legislative structure aligns with 21st-century financial needs.
Next steps
The paper notes that while the common bond is integral to the credit union model, reforms must balance modernisation with regulatory prudence. The government is clear that changes will require careful consideration to preserve the mutual ethos of credit unions while enabling their continued growth. The deadline for comments is 6 March 2025.
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HM Treasury and DWP consultation on unlocking growth through UK pensions reform
HM Treasury and the Department for Work and Pensions (DWP) have launched a consultation on measures to reform the UK pensions market, aiming to enhance saver outcomes, reduce inefficiencies, and encourage investment in domestic growth.
Objectives of the consultation
The review seeks to address systemic inefficiencies in the pensions market and support economic growth by focusing on:
- Scale and consolidation: Encouraging larger, better-managed Defined Contribution (DC) schemes.
- Efficiency in the Local Government Pension Scheme (LGPS): Reducing fragmentation and improving governance.
- Value over cost: Shifting the focus of pensions outcomes to long-term value for savers.
- Boosting investment in UK assets: Channelling pension capital to support growth and infrastructure projects.
Key proposals
Achieving scale in workplace DC schemes
The government is advocating for “fewer, bigger, better-run schemes” capable of delivering diversified investment strategies and superior long-term returns. To achieve this:
- Minimum size requirements for default arrangements in workplace DC schemes may be introduced.
- Limits on default arrangements could address market fragmentation and ensure alignment with savers’ best interests.
Overriding individual contracts to accelerate consolidation
Previous responses to an earlier call for evidence highlighted that the need for saver consent is a barrier to transferring assets into better-performing schemes. The consultation proposes legislative changes to enable bulk transfers without individual consent, while safeguarding consumers through appropriate protections.
Role of employers and advisors
The consultation seeks views on:
- The future role of employers in a consolidated pensions market.
- Potential enhanced oversight of advisors to ensure alignment with the goals of improved governance and value delivery.
Rationale for reform
The consultation emphasises that scale drives efficiencies, economies, reduced risks, and better outcomes for savers. Current inefficiencies, fragmentation, and excessive focus on cost over value hinder long-term returns and investments into productive UK assets. Consolidation would position larger schemes to access a broader range of asset classes, benefiting savers and supporting domestic economic growth.
Broader implications
The review also considers:
- Sustainability of Local Government Pension Schemes: Addressing affordability and efficiency to benefit members, employers, and taxpayers.
- Role of pensions in financial markets: Balancing returns and growth with broader financial stability objectives, including impacts on the gilt market.
- Complementary initiatives: Aligning with ongoing reforms such as the Value for Money (VFM) Framework and regulatory updates led by DWP, The Pensions Regulator (TPR), and the Financial Conduct Authority (FCA).
Next steps
Stakeholder feedback will shape the development of final proposals, which may require primary legislation. A decision on including these measures in the forthcoming Pension Schemes Bill 2025 will follow the consultation’s conclusion. The deadline for comments is 16 January 2025.
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HM Treasury launches consultation on a UK Green Taxonomy
HM Treasury has issued a consultation to assess the potential role of a UK Green Taxonomy in mitigating greenwashing and attracting private capital to meet the nation’s sustainability goals, including its transition to a net zero, climate-resilient, and nature-positive economy.
What is the UK Green Taxonomy?
- A classification tool to define economic activities supporting climate and environmental objectives, aligning with international frameworks used by 20 other jurisdictions.
- Intended to increase sustainable investment and limit greenwashing by providing clarity on sustainability claims at the activity level.
- Complements existing reporting frameworks like the ISSB standards and the Transition Plan Taskforce Disclosure Framework, which operate at the entity level.
Purpose of the consultation
The consultation seeks input on whether a UK Green Taxonomy would:
- Complement existing policies by channelling investment towards sustainability goals.
- Address market challenges, such as greenwashing, with a user-friendly framework.
The consultation is focused on:
- Use cases: How could a UK taxonomy integrate with the broader sustainable finance framework and support sustainability objectives?
- Design challenges: Key features and practical considerations for usability.
- Market needs: The taxonomy’s role in enabling investment decisions, aligning with international standards, and driving innovation.
Next steps
Stakeholders are invited to provide feedback on the taxonomy’s design, application, and potential benefits. The deadline for comments is 6 February2025.
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HM Treasury seeks views on Financial Services Growth and Competitiveness Strategy
HM Treasury has issued a call for evidence to shape its forthcoming Financial Services Growth and Competitiveness Strategy, highlighting the critical role of the sector in driving economic growth, investment, and international competitiveness.
Objectives of the strategy
The strategy, set for publication in Spring 2025, aims to:
- Generate sustainable, inclusive growth for the financial services sector.
- Strengthen the UK’s position as a global financial centre amidst rising international competition.
- Align the sector’s growth with broader goals, such as regional development, net zero, and economic resilience.
Key areas of the consultation
The call for evidence invites input on the following:
- Opportunities and challenges: Understanding growth opportunities, regulatory impacts, and international competitiveness.
- Future priorities: Factors influencing investment decisions and actions to enhance the sector’s competitiveness over the next decade.
- Sector-specific perspectives: Insights are requested from diverse subsectors, from local credit unions to global asset managers, to ensure a balanced approach.
- Policy alignment: Feedback is requested on how government policy can create favourable conditions for sector growth, including skills development, innovation, and infrastructure.
Respondents are asked to provide evidence on:
- The proposed scope and focus of the strategy.
- Growth opportunities and investment priorities within the sector.
- Factors influencing the UK’s appeal as a destination for financial services.
- Actions to boost the UK’s global competitiveness over the next decade.
Next steps
This consultation marks a pivotal step in shaping the future of one of the UK’s most globally significant industries. By aligning growth with sustainability and resilience, the government seeks to secure the sector’s role as a cornerstone of the UK economy while addressing increasing international competition. The deadline for comments is 12 December 2025.
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HM Treasury launches consultation on captive insurance regulation
HM Treasury has issued a consultation on the regulation of captive insurance, aiming to explore how the UK can enhance its attractiveness as a domicile for captive insurance entities, strengthen its insurance sector, and bolster international competitiveness.
What is captive insurance?
Captive insurance is a form of self-insurance where a company establishes an entity to insure or reinsure risks within its corporate group. Key benefits can include:
- Flexibility: Captives allow businesses to cover emerging or novel risks that might not be insurable in traditional markets.
- Cost efficiency: Direct access to reinsurance markets and retention of premiums can reduce costs, especially during hard insurance markets with limited capacity.
- Enhanced risk management: Captives provide a mechanism for tailored risk retention and mitigation.
Objectives of the consultation
The consultation aims to help the UK government:
- Support the growth and international competitiveness of the UK insurance sector.
- Strengthen the contribution of the insurance market to the UK economy.
- Evaluate whether regulatory reforms could make the UK a more attractive domicile for captive insurers.
Stakeholder engagement
The consultation is seeking views on:
- The economic case for regulatory changes to promote captive insurance in the UK.
- Specific areas where regulatory adaptations may be needed to attract captives.
- Broader perspectives on the UK’s role in the global captive insurance market.
Next steps
Responses to the consultation will inform the government’s assessment of whether reforms are justified. The consultation notes that any regulatory changes would involve collaboration with the FCA and PRA to balance competitiveness with prudential oversight. The deadline for comments is 7 February 2025.
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EIOPA welcomes approval of the global Insurance Capital Standard
The European Insurance and Occupational Pensions Authority (EIOPA) has welcomed the International Association of Insurance Supervisors’ (IAIS) approval of the global Insurance Capital Standard (ICS). The new standard will apply to internationally active insurance groups (IAIGs) and is designed to provide a globally consistent, risk-based measure of capital adequacy.
Some context
The ICS represents a significant step towards global regulatory harmonisation for the insurance industry. It incorporates many of the key principles of the EU’s Solvency II regime, including market-consistent valuation, risk-based capital requirements and the use of internal models.
Key takeaways
- Global consistency: The ICS will create a common language for supervisory discussions on group solvency and promote global alignment across group capital standards.
- Solvency II principles: The new standard embraces many of the key features of Solvency II, including market-adjusted valuation, risk-based capital requirements and the use of internal models.
- US Aggregation Method: EIOPA notes that the US Aggregation Method (US AM) provides a basis for the implementation of the ICS, but requires further adjustments to ensure comparability with the ICS, particularly in the areas of interest rate risk and the timing of supervisory interventions.
Next steps
The press release noted EIOPA is committed to working closely with the IAIS and its members to ensure a smooth transition to the new ICS standard and to support the implementation assessment process.
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