Insights on Conservative Party Conference: Financial Services

Despite the many – and controversial – announcements at Conservative Conference about HS2 and smoking, there were a number of important discussions about the role and importance of financial services at Conservative fringe events.

There was a clear focus on the importance of competitiveness, regulatory culture change and the need for regulator accountability, as well as how best to encourage pension funds and capital markets to invest in key long-term priorities such as Net Zero and future infrastructure.

There was widespread support for the Financial Services and Markets Act which received Royal Assent earlier in the summer, with the conversation turning to how best to ensure it was fully and successfully implemented and ministers suggesting that this would require another 12 months of work.

There was lots of discussion on the nature of ‘risk’ and risk taking within the sector and that there needs to be a greater appetite for risk from the regulators – Treasury Minister Andrew Griffith talked about needing to ‘swing the pendulum’ on risk to get a more balanced approach and to make the UK more competitive.

There was some discernable differences here with others suggesting that ‘we can’t regulate our way to competitiveness’, and instead pointing to demand issues within the sector which has led to a loss of competitiveness.  There was also a concern that regulators shouldn’t be solely to blame for any risk aversion in the system, with some speakers suggesting parliament is a more likely candidate.

The UK’s regulatory approach also featured heavily and was a big discussion point across the fringes, with a heavy emphasis on overly burdensome regulation and the need to reduce it where possible.  Ministers talked about avoiding the ‘chilling effects of regulation’ in terms of losing talent to less regulated parts of the sector and about needing to get a culture change within the regulators.

There was  a recognition that regulation can often slide into unintended consequences – ‘better to be right rather than fast’ was how Griffith put it – and he wants more practitioners on boards of regulators to be ‘the restraining hand’ on the regulators to avoid unnecessary/unintended consequences.

On metrics and measuring competitiveness the Minister tended to focus on the operational efficiency issues around speed of authorisations.  More broadly Griffith did not agree with creating an independent body to oversee the work of the regulators and that ultimately it was for parliament to play a key role on accountability.

On climate it was very noticeable that there were lots of conversations on the importance of capital markets and that these need to be put to use in financing key priorities around Net Zero investment and new infrastructure.

But overarching all of this was how noticeable it was that ministers were making big efforts in their remarks, to talk about the importance of the party’s relationship with the financial services sector and business more widely.  Recent criticisms around long term certainty for investors had clearly struck a chord and Ministers from Treasury, DBT and DSIT were all keen to dispel concerns that the Conservatives are no longer the party of business.

Whether they convinced everyone remains to be seen.  Certainly Labour is making big efforts next week with the business community at their conference in Liverpool, with an extensive programme for their business day, access to key shadow ministers as well as a large corporate presence in the exhibition hall.

The battle to court business continues…

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