In our office there’s a button on the microwave marked ‘chaos’.

I think this is something to do with defrosting, but I’m not brave enough to press it and find out.

Happily, chancellor Rachel Reeves must have felt the same and declined to press her own version of the chaos button with her first Budget. Although it received a frosty response from some quarters, it didn’t have the same impact on markets as the disastrous Liz Truss mini Budget, for which we can all be grateful.

Almost more important for financial services was what came out of the Mansion House speech last month.

While the Budget focused on economic stability and public investment, the objective of the Mansion House speech was to set out the steps the government is taking to drive growth.

We discovered we can look forward to an inaugural financial services growth and competitiveness strategy in the spring, aiming to dismantle barriers to growth and investment in the sector.

Megafunds and more

In the world of pensions the Pensions Investment Review, jointly emerging from the Department for Work and Pensions and the Treasury, contains plans to establish ‘megafunds’, such as exist in Canada and Australia, to help restart economic growth.

A Pension Scheme Bill in 2025 will legislate for megafunds to consolidate the DC market, with the objective of delivering better outcomes for savers while investing for growth. Alongside this, there are plans for local government pension scheme assets to be consolidated into pools.

Phase 2 of the pensions review, looking at the question of adequacy of overall saving, is due any day now, yet the government seems a lot less keen to talk about this.

There are growing concerns that this area of pensions policy, including implementing the relatively uncontroversial 2017 recommendations to reform auto-enrolment, may get kicked into the long grass.

For those hoping to see pensions dashboards come into being before the end of the century, there was further information on the regulatory framework for pensions dashboard service firms. This admits that priority will be given to the MoneyHelper dashboard provided by the Money and Pensions Service, and that commercial dashboards are still “a long way off”.

Regulatory reform

There seems to be a head of steam building up around the role of the FCA and other regulators.

A highly critical report from MPs grabbed the headlines in recent weeks, claiming the FCA was not fit for purpose.

The report was compiled by the All Party Parliamentary Group on investment fraud and fairer financial services, and press coverage focused on the complaints of disgruntled ex-employees and victims of fraud.

It nonetheless contained some interesting recommendations from a range of respected, independent financial services experts.

From a different angle, the government has sent a remit letter to the regulators which underlines the importance of their secondary objective of making the UK more competitive.

The FCA is due to publish its new five-year strategy in 2025, and chief executive Nikhil Rathi has refused to confirm or deny if he’s seeking to stay when his current five-year term expires next September.

It’s possible we are looking at the start of a regulatory rationalisation from the new government.

Behind the scenes, questions are being asked about our current regulatory architecture and whether it is fit for purpose, in particular the respective roles of the FCA and The Pensions Regulator. Any meaningful steps towards reform are probably a way off yet though.

The competitiveness objective explicitly raises its head in the latest consultation from the FCA and Prudential Regulation Authority on pay reform for banks, building societies and PRA-designated investment firms.

Described as making the regime more “simple, effective and proportionate”, proposals will loosen the requirements on remuneration, including allowing part-payment of bonuses for senior bankers from year one and reducing the bonus deferral period. Overall, the idea is to bring the UK “more in line with international practice” – or encouraging senior bankers to relocate to this side of the Channel.

One subject where the FCA admitted it could have done better was announcing its planned changes to making enforcement actions public (so-called ‘naming and shaming’).

In response to widespread criticism, we saw a revised set of proposals out for consultation in November. This makes it clear any ‘naming and shaming’ will only happen in cases of clear and justifiable public interest.

What’s coming down the track

We’ve been waiting a long time for feedback on the advice/guidance boundary review, and there’s a heavily trailed consultation on its way by the end of December.

The FCA has, sensibly, decided to focus first on pensions, because of the important and complex decisions consumers have to make about retirement. The consultation will put forward high-level proposals for targeted support, which would allow regulated firms to support pension savers in a new way. In the first half of 2025 we can expect rules for better support for consumers in retail investments and pensions.

One more pre-Christmas present is likely to be the FCA’s findings on ongoing advice.

Earlier this year it requested annual review data from the 20 biggest advice firms, and a further survey in October asked for more detailed information, including evidence showing continued suitability of clients’ products and investments. The impact is likely to be wider than the big firms alone, and there is some anxiety about what it might contain.

With all the consultation going on, including a green paper on the UK’s modern industrial strategy, you might think the government and regulators are unsure of how to achieve their desired growth strategy and objectives. On the other hand, it could be looked upon as a great opportunity to engage with a government and regulators which are open to hearing the industry’s views. Policymakers are all ears.

Alison Gay is senior public affairs consultant at the lang cat

—
Stay ahead and keep up to date with regulatory changes and public affairs through our Tracker service. For advice professionals, the way you access Tracker is through Analyser – find out more or log in