Britain’s government has a lot on its plate. The country is still in the midst of a costs of living crisis, is facing conflicts in Ukraine and the Middle East, and is seeking greater economic growth.
In domestic politics and economics, various businesses have interests the newly elected Labour government under PM Keir Starmer can bring about. The financial services sector, one of Britain’s largest industries, is one of these.
Innovate Finance, a trade body representing the UK fintech sector, has mapped out its own ideal policy outcomes from Starmer’s administration. A number of the association’s policy hopes are a continuation of financial and fintech policies seen under the Conservative government.
This includes further development of a smart data economy and the UK’s Open Banking network, something the Rishi Sunak’s Conservative government hoped to achieve via its Data Protection and Digital Innovation (DPDI) Bill.
Innovate Finance hopes that Labour will work to build on this in a number of areas. Labour, in the body’s view, should prioritise the next phase of delivering Open Banking, unlock the country’s Open Banking potential and set out a clear vision for Open Finance – the latter being the wide implementation of Open Banking practices across financial services.
Key to achieving this will be adopting smart data statutory powers for Ministers in order to make Open Banking work more effectively, extend these to Open Finance and introduce Smart Data schemes, Innovate Finance argues.
Janine Hirt, CEO at Innovate Finance, said: “The UK has a window of opportunity to forge ahead which it cannot afford to miss. Our plan sets out a clear, actionable programme for the new government to support the continued growth of the UK fintech ecosystem.”
The DPDI Bill was the Conservative government’s main legislative instrument for bringing about a data-driven economy. Cultivating Britain’s digital economy was a long-term goal of Rishi Sunak, who worked in finance before moving into politics.
Labour too is keen to capitalise on and expand Open Banking and its potential in the UK, having emphasised the significance of the technology, as well as AI, in policy documents and in its 2024 election manifesto.
The party may approach this differently to the formerly governing Conservatives, now in opposition after taking a battering in last Thursday’s (4 July) election. Although Keir Starmer and party leadership have not officially weighed in, several Labour MPs did voice concerns about the DPDI Bill’s agenda.
In May, Labour MP for East Leeds, Richard Burgon, led an early day motion citing concerns about the banking surveillance aspects of the bill. Although Liberal Democrat, Green, Plaid Cymru and SNP MPs also joined the motion, the majority were Labour MPs generally considered to be on the left of the party.
Again it is important to note that Starmer and senior Labour leadership did note join the motion or publicly raise any concerns, but this does show that there is some discontent with the Bill among the rank-and-file MPs of the party. Labour may therefore take a different approach to pursuing its Open Banking agenda.
A fintech/tech area Labour has introduced one notable policy on is AI, with the party’s manifesto outlining plans for data centres to support the technology’s development. Innovate Finance is hoping for similar moves in the area of fraud.
The trade body is calling for the creation of a National Anti-Fraud Centre to coordinate across government, crime agencies, regulators and the industry, and to introduce shared responsibility and liability for social media and telecommunications firms.
This is a similar sentiment shared by the payments industry, which penned its own letter to the government prior to the general election outlining what it would like the new Chancellor of the Exchequer – now confirmed post-election as Labour’s Rachel Reeves – to do for the industry.
Labour seems to be in the industry’s camp on this issue, with the party – according to the Financial Times, at least – pledging to make Big Tech firms, this terminology would logically include social media firms like Meta and X, to take some responsibility for fraud.
Incoming rules from the Payments Systems Regulatory (PSR) are set to require payments companies to reimburse victims of fraud, with no other stakeholders required to do so. The banking sector has often pointed out that the majority of fraud occurs via social media platforms.
Regarding this policy, Innovate Finance is calling on Starmer’s government to ensure the APP fraud reimbursement scheme is “introduced in an appropriate and effective way”. Innovate Finance would also like Labour to set what it calls an “ambitious target’ to halve payments fraud by 2030.
Politicians across the UK’s political spectrum have routinely cited Britain’s financial services industry as world leading and an example of one of the country’s success stories. Securing continued leadership for the sector is a goal the industry and government will have to work on extensively, and find common ground.
Starmer and Reeves will, of course, have overall oversight of this, but other members of Labour’s cabinet will also have to work closely with Innovate Finance, UK Finance, The Payments Association (TPA), and other stakeholders.
This includes Darren Jones, Chief Secretary to the Treasury – the third most senior Treasury position after the First Lord of the Treasury, held by Starmer, and Chancellor Reeves – alongside Tulip Siddiq, Economic Secretary to the Treasury and City Minister, and James Murray, Exchequer Secretary to the Treasury, appointed to their respective positions this week.
