This week’s Queen’s Speech, marking the start of the parliamentary year, has at its heart a landmark Financial Services Bill, which is the next test for whether the government is serious about its vision for a financial system that is Net Zero-aligned, acts in the interests of communities and citizens, and drives sustainable economic growth across the country.
Crucially, the Bill is expected to deliver the government’s ‘Future Regulatory Framework ’ . This proposes fundamental changes to the purpose of the rules that shape the critical financial services sector, and who holds power over them.
The government’s flagship proposal is to introduce an ‘international competitiveness’ objective for regulators. International competitiveness refers to the ability of UK firms to compete for business overseas, and for the UK to remain an attractive location for global businesses.
The Lab and partners have been raising the alarm that this proposal fails to learn the lessons of the 2007/08 global financial crisis, while also missing a once-in-a generation opportunity to ensure that the purpose of financial regulation reflects the role finance should play in serving the UK’s economic, environmental, and social goals.
It seems the British public agrees. A representative sample were asked about their views on the proposal for regulators to be given a statutory objective to promote the ‘international competitiveness’ of the finance sector.
- Two thirds of people (66%) say the proposal is out of touch and elitist (compared to 34% who think it represents their interests). For the over-55s, this rises to 73%.
- When asked whether the proposal puts the needs of the City of London first or helps to ‘level up’ the country overall, nearly seven in ten (67%) people agree with the former. People living in the North East of England (77%) feel this most strongly.
- Over six in ten people (62%) think the proposal repeats the mistakes of the past, rather than looking to the future. People aged 55+ feel this most strongly (68%) – perhaps a reflection that this age group were badly affected by the last financial crash.
The government’s proposed financial reforms require regulators to cheerlead for the sector, when they should be independent referees making decisions in the public interest. At the Queen’s Speech, the Chancellor needs to show that his priority is ordinary people across the UK, and the planet, not narrow City interests.
In February the Lab and 36 other public interest groups published a joint statement that makes six recommendations to strengthen the government’s proposals. To ensure that regulators act in the public interest, we are calling for them to be given new duties to 1) align the financial system with the 1.5 degrees goals of the Paris Agreement, and 2) promote financial inclusion. We also call for a step-change in public accountability over future rule-making. This could be achieved through robust parliamentary scrutiny, making lobbying transparent, and addressing the gross imbalance in stakeholder engagement with financial regulation by public interest groups (including consumer groups, civil society organisations, and groups representing SMEs) versus industry representatives.
We are now working with civil society organisations in the Lab’s community to make sure that the voice for social and environmental justice is heard loud and clear and results in improvements to the bill as it passes through parliament. Read our latest parliamentary briefing, written in partnership with WWF and ShareAction – Financial Services Bill 2022: once-in-a-generation opportunity to legislate for action on climate and nature.
If you’d like to get involved or find out more, please get in touch.
* The research data is based on a survey carried out by Opinium Research. Total sample size was 2,000 UK adults and the fieldwork was carried out between 29th April – 3rd May 2022. The figures have been weighted and are representative of all UK adults (aged 18+).