The government is putting pressure on the UK’s financial services regulators to make sure they promote the growth of the City of London, the chancellor has said.
Rachel Reeves said she supported the Conservatives’ decision to introduce a secondary objective for the Financial Conduct Authority and the Prudential Regulation Authority. This states that the regulators must “facilitate the international competitiveness of the UK economy … and its medium to long-term growth”.
Amid concerns that the City bodies are not doing enough to promote these goals, Reeves said that she and Tulip Siddiq, the new economic secretary to the Treasury, “are constantly asking regulators, ‘What are you doing in practice to meet that secondary objective?’”
The Financial Conduct Authority regulates nearly 50,000 UK businesses to ensure competition for consumers and the proper functioning of the market for financial services. The Prudential Regulation Authority is part of the Bank of England and supervises 1,500 financial firms such as banks and insurers.
Reeves is due to present her plans to shake up the UK’s financial services sector in her maiden Mansion House speech this year. The chancellor said the government would follow through on its manifesto pledge to carry out a “financial services review to go through the rulebook and tear up rules that are unnecessary or duplicative. We are determined to do that.”
She said: “I believe that our financial services sector is the jewel in the crown of the UK economy, but we need to stay competitive in a very competitive landscape. We do risk losing business, whether that’s the listing of companies to New York or the migration of US banks to other European capitals.
“We are pushing the regulators to demonstrate that they are taking seriously the competitiveness of our financial services sector. I’m determined to keep those good jobs paying decent wages, not just in London but in Leeds as well, where I’m an MP, and other financial hubs around the UK.”
Jeremy Hunt, Reeves’s predecessor as chancellor, introduced the secondary objective for the UK’s post-Brexit financial regulation last year, alongside a requirement for the watchdogs to publish a report on how they are meeting the targets for growth and competitiveness.
Reeves was speaking on a tour of North America, where she met the giant Canadian pension funds on which the government wants the UK’s local authorities to model themselves to boost investment in riskier sectors of the economy. The chancellor has made higher growth the centrepiece of her plans for the economy and the public finances, and said she supported the growth push made by the Tories in the Financial Services and Markets Act last year.