The UK general election is just over a month away, and UK Finance has outlined the policies it believes the next government should pursue for the country’s financial services sector.
Britain’s financial services sector is a “global success story”, UK Finance asserts, and the trade body hopes that whichever government occupies Downing Street after the 4 July poll will remain supportive of the sector’s growth.
Both major UK political parties, Labour and Conservative, have noted the role fintech, finance and payments play in the British economy. However, the industry faces regulatory upheaval around a range of issues, such as fraud and reimbursement, Big Tech’s role in finance, crypto and digital assets and Open Banking, among other areas.
David Postings, Chief Executive of UK Finance, said: “The UK’s financial services sector is a global success story and one any future government should seek to partner with and support.
“Our sector delivers real benefits to society by helping people buy their homes, helping companies scale up, providing financial education, fighting fraud, and much more.
“I hope that by outlining the policy agenda the sector would like to see taken forward post-election, and through working in partnership with government, we can help build a better society for all.”
Fighting fraud
UK Finance has mapped out ideal government policy across three areas – supporting people and businesses, supporting growth and supporting communities and society. The latter area contains some notable recommendations around fraud prevention.
Fraud has become an area of concern for the industry and the regulatory bodies overseeing it of late. Notably, the Payment Systems Regulator (PSR) will introduce a new rule in October recurring payments providers to reimburse victims of fraud up to £415,000.
In UK Finance’s manifesto, the trade body has called for this responsibility to be extended beyond the payments sector, arguing that technology, social media and telecoms companies should also contribute to the costs of tackling economic crime and fraud reimbursement.
This is unsurprising given the industry response to the PSR rules. UK Finance’s fellow trade body, The Payments Association, has been critical of the rules, and other commentators have noted the financial burden the reimbursement requirement will place on British payments firms.
“The financial services industry is at the forefront of efforts to tackle fraud,” UK Finance explained in its manifesto.
“We believe the government must look at how social media and telecoms firms can be made to do more to tackle the scams that proliferate on their sites and networks, including contributing to the substantial cost of tackling fraud and reimbursing victims.
“The approach to tackling economic crime needs to be holistic, with further reform to Companies House carried out as its vulnerabilities are often exploited by criminals.”
Going for growth
The finance sector’s crucial role in the British economy is hard to ignore, with the industry having come to the forefront of the country’s economic landscape over the past few decades, taking the place of various heavy and manufacturing industries.
Economic growth is a priority for both Labour and Conservative, with the UK having only just emerged from a mild recession and persistently high inflation, although falling to 2.3% this month, an ongoing burden for consumers and businesses.
UK Finance stressed: “Economic growth is key to the UK’s future success. The financial services sector is both an enabler of growth and a key economic sector in its own right.”
The organisation hopes that regardless of whether Sunak or Starmer, or possibly someone else, sits in Downing Street, the government will continue to champion the National Payments Vision and Strategy to ensure what it calls a “world-leading payments ecosystem”.
Additional ideal measures for UK Finance include issuing a HM Treasury-backed digital gift to encourage securities tokenisation, creation of a ‘Government Champion for Competitiveness’ to report annually to parliament on how regulations affect financial services firms and publishing a tax roadmap for financial services.
UK Finance asserts that economic growth is dependent on emergence of new technologies such as digital iD and Open Finance, as well as the aforementioned process of tokenisation.
Securing the right tax environment, with New York cited as an ideal example by the body, and regulatory conditions will also be essential to this.
To help individual consumers, UK Finance is calling on the government to look at the role of stamp duty in helping people get on the housing ladder and give more advice to people on making homes greener and more efficient.
The manifesto reads: “The financial services industry helps millions of customers make the most of their money, supports those in financial difficulty and plays an essential role in enabling people to realise their dream of owning a home.
“To help people manage and grow their money, we believe the government needs to make it more attractive for people to save and invest, as well as making financial education a core part of a child’s education.”
Where do the parties stand?
The UK’s two main political parties, and the most likely candidates to form a majority government – both on a historical basis and based on current polling data – are Labour and Conservative.
Regarding legislation, the incumbent Conservative government is pushing through the Data Protection and Digital Information Bill (DPDI). The purpose of this legislation is to regulate the processing of information relating to identified or identifiable living individuals, and Conservative MPs have been broadly supportive of its vision.
Some members of the Labour Party, although not party leadership itself, have been critical of the legislation. Six Labour Party MPs tabled an early day motion expressing their concern about the Bill’s financial surveillance caveats, and this was subsequently signed by 23 MPs from Labour, the LIberal Democrats, SNP and Greens, as well as some Independents.
This shows some disconnect between the two parties when it comes to financial services.
Another area Labour has been critical of the Conservatives on is retail banking, with the opposition party pledging to guarantee continued access to community banking services.
However, the parties do have some areas of agreement on finance. Both have recognised the growing role of Open Banking and Artificial Intelligence (AI) in Britain’s financial landscape, for example.
UK Finance and the sectors it represents can expect either Labour or Conservative, or perhaps a coalition government, to continue to recognise the significance of financial services to the UK economy – the intricacies of policy and regulation are where the differences may be found.
