It has been quite the busy period for the financial services industry.

In a mere matter of weeks we have had:

• The first Labour Budget for 14 years, all 77 minutes of it
• The extraordinary US election, with the unexpectedly emphatic result having profound economic and policy implications for the UK
• Rachel Reeves’ Mansion House speech, accompanied by a flurry of policy papers and announcements on radical plans for the pensions industry and a shake-up of financial regulation.

There are two consistent themes running through these major events: ‘growth’ and ‘gamble’.

The chancellor needs economic growth, and the UK economy needs economic growth. In this respect at least Reeves and the erstwhile Conservative leader Liz Truss are in agreement: without strong, sustained economic growth we’re all going backwards.

Reeves’ supply side reforms in the Budget involve some punchy tax and spending plans to revitalise the public sector. However, both the Office for Budget Responsibility and the Institute for Fiscal Studies have looked at the government plans and concluded economic growth will be anaemic at best.

And that was before president-elect Trump, with his talk of tariffs and hydrocarbons.

Reeves had precious little wriggle room in her Budget to start with. Now interest rates are back up to where they were after the ill-fated Truss/Kwarteng mini-Budget, and everyone’s looking nervously across the Atlantic to see what happens next.

Meanwhile the government is pressing ahead with plans for rapid consolidation of the UK’s pensions sector, focusing mainly on the Local Government Pension Schemes and on the defined contribution workplace sector.

Consolidation does indeed seem to be the direction of travel, with the value for money framework being used to batter scheme providers into submission.

But this will still take time, given the dozens of mastertrusts, hundreds of single employer schemes, hundreds of thousands of employers and millions of employees.

Will the end result lead to more economic growth? Maybe. That depends on whether pension scheme trustees drink the Kool-aid and buy into the government’s plans to pump money into infrastructure and unlisted assets. This seems far from being a slam-dunk for the government, depending as it does on these schemes interpreting their fiduciary duty as being best served by following the government’s political plans.

Growth and regulation

Reeves is also calling for the FCA to take a more risk and growth-oriented approach to financial regulation.

That word ‘gamble’ arises once again, as it’s argued the regulator needs to move on from the tightly cautious approach of the aftermath of the 2008 financial crisis.

The FCA itself has talked about wanting to launch a societal discussion about risk, so it sounds as if they’re on board with at least some of these proposals. Whether they buy into the growth agenda remains to be seen.

In the meantime, Reeves also promised in her Mansion House speech that we’d be hearing more soon about the review of the advice/guidance boundary. This should dovetail with the Treasury’s pension review, which has yet to start exploring the question of adequacy, and also its review of financial inclusion, aimed at improving access to financial services and products.

We’ve just skated over the surface of some pretty seismic disruptions to the landscape in which financial services firms operate and in which they serve their customers and clients. We’ll be back for further updates as we unpack the details and the consequences.

Tom McPhail is director of public affairs at the lang cat

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