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Mansion House 2024: A New Era for UK Financial Services

Executive Summary


The Chancellor's Mansion House 2024 speech and accompanying documents signal a significant shift in the UK's approach to financial services, with a clear focus on growth, competitiveness, and innovation.


Key takeaways:


  • Stability: The government is committed to maintaining economic stability to foster investment and growth.

  • Investment: To boost private investment, a range of measures will be implemented, including a new Financial Services Growth and Competitiveness Strategy, pension reforms, and attracting international capital.

  • Reform: Public services and the regulatory environment will be reformed to support growth and competitiveness while maintaining financial stability and consumer protection. Key initiatives include streamlining regulations, reviewing the Senior Managers and Certification Regime, and reforming the Financial Ombudsman Service.

  • Sustainable Finance: The UK aims to be a global leader in sustainable finance, and it has introduced a UK Green Taxonomy that focuses on green investment.

  • Technology & Innovation: The government encourages the adoption of new technologies, such as AI, while emphasising the need for robust risk management and operational resilience.


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Call to Action for Firms:


  • Engage: Actively participate in consultations and calls for evidence to help shape the future regulatory landscape.

  • Adapt: Review and adapt business models, products, and services to align with the evolving regulatory environment.

  • Innovate: Explore opportunities for innovation and adopt new technologies while ensuring robust risk management and compliance.

  • Prioritise Sustainability: Integrate sustainability into business strategies and operations.

  • Strengthen Risk Management: Enhance frameworks to address emerging risks and ensure operational resilience.


Mansion House 2024 marks a pivotal moment for the UK financial services sector. By understanding and responding to these changes, firms can capitalise on new opportunities and contribute to the UK's economic success.


I. Chancellor's Speech: A Vision for Growth


Chancellor Rachel Reeves delivered a landmark speech outlining a bold vision for the UK financial services sector centred on stability, investment, and reform.


A. Key Themes


  • Stability: The Chancellor emphasised the importance of restoring stability to the public finances, as demonstrated in the recent budget. This stability provides a foundation for long-term investment and growth.

  • Investment: Increasing private investment is crucial for driving economic growth. The government plans to achieve this by:

    • They are launching a Financial Services Growth and Competitiveness Strategy to foster a supportive environment for investment.

    • We are implementing pension fund reforms to unlock capital for investment in productive assets, including infrastructure and high-growth companies.

    • It is attracting international investment by strengthening relationships with key partners and promoting the UK as an attractive capital destination.

    • The UK prioritises sustainable finance and supports the transition to net zero, positioning it as a global leader in green finance.

  • Reform: Reforms will focus on both public services and the regulatory environment:

    • Public services will undergo reforms to improve efficiency and value for money.

    • The regulatory environment will be rebalanced to support growth and competitiveness while maintaining high consumer protection standards and financial stability. This includes streamlining regulations, reviewing the Senior Managers and Certification Regime, and reforming the Financial Ombudsman Service.


B. Implications for Firms


  • Growth Opportunities: The Chancellor's emphasis on growth and competitiveness signals a supportive environment for innovation and investment in the financial services sector.

  • Regulatory Changes: Firms should prepare for upcoming regulatory reforms, including potential changes to the Senior Managers and Certification Regime, the advice guidance boundary, and the Financial Ombudsman Service.

  • Sustainable Finance: Firms must integrate sustainable finance into their strategies and operations, aligning with the UK's net-zero transition goals and the forthcoming UK Green Taxonomy.

  • Pension Reforms: Pension funds will be encouraged to invest in productive assets, creating opportunities for firms to access capital and contribute to economic growth.

  • International Investment: The UK actively seeks to attract international investment, presenting opportunities for firms to partner with global investors.


C. Call to Action


  • Engage with the Government: Actively participate in consultations and calls for evidence to help shape the future regulatory landscape.

  • Embrace Innovation: Explore opportunities for innovation and adopt new technologies while ensuring robust risk management and compliance frameworks.

  • Prioritise Sustainability: Incorporate sustainability into business strategies and operations, aligning with the UK's green finance agenda.

  • Review and Adapt: Review existing business models, products, and services to ensure they are aligned with the evolving regulatory environment.


II. Mansion House 2024 Collection: A Comprehensive Package


The Mansion House 2024 package comprises a series of measures to strengthen the financial services sector and boost the UK's economic growth.


A. Key Themes


The core themes of the Mansion House package mirror those outlined in the Chancellor's speech:


  • Stability: Ensuring economic stability to foster confidence for investment.

  • Investment: Promoting investment through financial services, with a focus on:

    • Developing a Financial Services Growth and Competitiveness Strategy.

    • Unlocking pension fund capital for investment in productive assets.

    • Creating a world-leading sustainable finance framework.

    • Attracting international investment.

  • Reform: Reforming the regulatory landscape to unlock innovation and growth, including:

    • New remit letters for regulators with a focus on growth.

    • Reviewing the advice guidance boundary.

    • Modernising the Financial Ombudsman Service.

    • Abolishing the Certification Regime.

    • Supporting the mutual and cooperative sector.

    • Driving innovation in payments, capital markets, and insurance.


B. Implications for Firms


The Mansion House package has broad implications for firms across the financial services sector:


  • Growth Opportunities: Focusing on growth and competitiveness creates new opportunities for firms to innovate, invest, and expand.

  • Regulatory Changes: Firms must prepare for a wave of regulatory reforms, including changes to the Senior Managers and Certification Regime, the advice guidance boundary, and the Financial Ombudsman Service.

  • Sustainable Finance: Firms must integrate sustainability into their strategies and operations, aligning with the UK Green Taxonomy and forthcoming disclosure requirements.

  • Pension Reforms: Pension funds will be encouraged to invest in productive assets, providing firms with access to new sources of capital.

  • Innovation and Technology: Firms should embrace innovation and new technologies, such as AI and distributed ledger technology, while ensuring robust risk management and operational resilience.

  • Mutuals and Co-operatives: The government is committed to supporting the mutual and cooperative sector, creating opportunities for firms in this space.


C. Call to Action


The Mansion House package calls on firms to take proactive steps to adapt to the changing landscape:


  • Engage in Consultations: Actively participate in the numerous consultations and calls for evidence to help shape the future regulatory landscape.

  • Review and Adapt: Review existing business models, products, and services to ensure they are aligned with the evolving regulatory environment.

  • Invest in Innovation: Explore opportunities for innovation and adopt new technologies.

  • Prioritise Compliance: Ensure compliance with existing and forthcoming regulations, including those related to sustainable finance, technology, and financial crime.

  • Strengthen Risk Management: Enhance frameworks to address emerging risks and ensure operational resilience.


III. Deep Dive into Key Documents


This section provides a detailed analysis of three critical documents released as part of the Mansion House 2024 package:


A. Financial Services Growth & Competitiveness Strategy Call for Evidence


This document outlines the government's vision for a thriving financial services sector and calls for evidence from stakeholders to inform the development of a new growth strategy.


  • Key takeaways:

    • The government is committed to creating a pro-business environment that supports innovation and growth in financial services.

    • The strategy will focus on critical areas such as skills, innovation, regulation, and international competitiveness.

    • The government seeks input from various stakeholders, including firms, consumer groups, and academics.

  • Implications for firms:

    • Firms should actively participate in the Call for Evidence and engage with the government to shape the strategy.

    • Firms should prioritise innovation and technology adoption to maintain competitiveness.

    • Firms need to invest in skills and talent development to meet the sector's evolving needs.

    • Firms should consider international opportunities and challenges, including regulatory developments and trade agreements.


B. Next Steps for Reforming the UK Markets in Financial Instruments Directive


This policy paper outlines further reforms to the UK's MiFID framework, building on the Wholesale Markets Review and the Financial Services and Markets Act 2023.


  • Key takeaways:

    • The FCA will gain enhanced powers to direct the reporting of over-the-counter (OTC) positions to improve transparency and risk management in commodity derivatives markets.

    • HM Treasury will revoke the legislative requirements for transaction reporting under MiFIR, and the FCA will establish a new, streamlined regime.

    • The firm-facing regulations in the MiFID Organisational Regulation will be revoked and replaced by FCA rules, aiming for a more flexible regulatory framework.

  • Implications for firms:

    • Firms trading commodity derivatives should prepare for potential OTC position reporting requirements changes.

    • Investment firms should anticipate a new transaction reporting regime from the FCA.

    • Firms must adapt to the new FCA rules replacing the revoked MiFID organisational requirements.


C. Private Intermittent Securities and Capital Exchange System (PISCES): Consultation Outcome


This document confirms the government's intention to proceed with PISCES, a new regulated trading platform for intermittent trading of private company shares.


  • Key takeaways:

    • PISCES will operate as a secondary market, facilitating the trading of existing shares in intermittent trading windows.

    • Access will be limited to institutional investors, employees, and high-net-worth/sophisticated individuals.

    • The initially proposed market abuse regime will be replaced with a bespoke disclosure regime overseen by the FCA.

    • There will be no transaction reporting requirements for PISCES.

    • PISCES operators can set admission criteria and decide on CSD usage.

    • Share buybacks by companies will initially be prohibited.

  • Implications for firms:

    • PISCES creates new opportunities for firms operating in private markets, including trading platforms, brokers, and investment firms.

    • Firms can apply to become PISCES operators, requiring them to meet FCA requirements and establish appropriate rules and infrastructure.

    • Private companies can gain access to a regulated secondary market for their shares.

    • Eligible investors will have access to a broader range of investment opportunities in private companies.

    • Firms involved in PISCES must comply with the FCA's disclosure regime and other rules governing the platform.


IV. Conclusion


Mansion House 2024 marks a significant turning point for the UK financial services sector. The government's focus on growth, competitiveness, and innovation creates many opportunities for firms. However, firms must adapt proactively to the changing regulatory landscape and embrace new technologies. By understanding and responding to the announcements made at Mansion House 2024, firms can position themselves for success in this new era of growth and contribute to the UK's economic prosperity.



 
 

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