Labour has criticised the Conservative party for taking the UK’s financial services for granted. Here’s how it plans to manage one of the country’s most successful sectors

The July 4 election’s projected landslide victory for the opposition Labour Party means that it’s likely that many things are going to change in the UK. Among that is the financial services sector, mainly because Labour has released details of its plans for that sector if it moves into #10 after the fourth.

As the Labour party notes, the financial services sector is one of Britain’s success stories. It contributed 12% of the UK’s economic output in 2023. It drives economic growth and job creation. The party states that championing the UK’s role as a global leader in financial services will support its mission in government to secure the highest sustained growth in the G7, with good jobs and productivity growth across the country. 

Labour’s plan involves streamlining some of the Financial Conduct Authority’s (FCA’s) rules and getting rid of overlapping ones. It will create a “Regulatory Innovation Office” that could help regulators share data, and monitor the financial watchdog’s work.

It plans on more consumer protection and regulation in the payday loan and buy now, pay later consumer credit market. Private finance will be required to align investments with the goals of the Paris agreement on climate change, more backing for credit unions, and a pledge to maintain high international financial standards.

“It is important to have a proper review to make sure that the rules and regulations that we’ve got are fit for purpose and don’t cut across each other. So it’s about having smart and sensible regulation that works for consumers, and also works for the sector,” said Shadow Chancellor, Rachel Reeves.

The plan

Titled Financing Growth, the plan is essentially six policy priorities that a new government will focus on in financial services. The party states that its plan will rejuvenate the country’s economy based on an approach that is both pro-business and pro-worker.

The policy priorities:

1. Deliver inclusive growth of the UK’s financial services sector by scaling regional financial centres alongside established hubs in London and Edinburgh and unlocking the full potential of the mutuals sector.

2. Enhance the international competitiveness of the UK’s financial services sector by pursuing a more joined up and innovation-centred approach to regulation and supervision, streamlining the regulatory rulebook in line with the Consumer Duty, strengthening our international engagement in financial services, and building a more collaborative relationship with the EU.

3. Reinforce consumer protection and financial inclusion by exploring alternative models for increasing financial resilience including longer-term fixed rate mortgages, adopting a coordinated cross-sectoral approach to fraud prevention, creating a national financial inclusion strategy, and regulating the Buy Now Pay Later sector.

4. Lead the world in sustainable finance by making the UK a global hub for green finance activity, delivering a world-leading green finance regulatory framework, and partnering with the financial services sector to support the decarbonisation of our homes.

5. Embrace innovation and fintech as the future of financial services by becoming a global standard-setter for the use of AI in FS, delivering the next phase of Open Banking, defining a roadmap for Open Finance, embracing securities tokenisation and a central bank digital currency, and establishing a regulatory sandbox for financial products to reach underserved communities.

6. Reinvigorate our capital markets by reviewing the pensions and retirement savings landscape, enabling greater consolidation of all types of schemes, empowering the British Business Bank to invest more in growth capital, establishing a British ‘Tibi’ scheme to increase institutional investment in venture capital and small cap growth equity, and increasing investment in infrastructure and green industries through Solvency UK reforms.

In the likely event that the Labour party does come into power, there will be some changes in the financial services sector but it doesn’t appear that there will be tremendous upheaval. It’s important to note, though, that this is the party’s first statement of intent for financial services. A lot can happen over the next few weeks and we will keep you updated.

Compliance and the UK General Election – Special Webinar

Every sector could be impacted and every area of compliance is likely to be reviewed by the next government. From overhauls of financial services regulation, reviews of data protection law, closer alignment with EU regulations and an expansion of health and safety protections, the next parliament will see compliance at the centre of the regulatory agenda.

With everything from whistleblowing reform to overhauls of corporate governance, new employment rights like menopause leave and expanded equal pay rules, alongside crackdowns on tax evasion and expansion of the money laundering regulations, organisations large and small should prepare for the outcome of the general election.

This webinar will cover:

  • What the main parties are pledging on key compliance areas
  • Potential changes to legislation including the Equality Act, sexual harassment and employment rights
  • Expected legislation on AML, bribery, sanctions, fraud and economic crime
  • Possible expansion of regulations around GDPR, AI and health and safety
  • Preparing your organisation for future regulatory changes and new requirements