The financial services industry should be braced for significant regulatory change, following a general election.
This was the stark warning delivered at the Corporate Adviser summit by Iain Anderson, founder of public affairs company Cicero Group and author of ‘F**k Business: The Business of Brexit’.
Anderson said it would be the forthcoming election, rather than Brexit, that could bring the most widespread changes.
He pointed out that if the Conservatives, led by Boris Johnson, had the largest number of seats that are likely to pursue a more ‘laissez-faire’ approach to regulation.
He said: “We are likely to see a much more lighter touch approach to regulation than we have had, either with Philip Hammond or George Osborne.”
Anderson said this will need to happen in a ‘no deal’ scenario, but is also likely to be the policy pursued if a withdrawal agreement and deal is struck with the EU.
“Firms need be prepared for ‘low barriers’ in every sense, whether it is to get the lorries through at ports, or when it comes to issues like financial regulation.”
“We would expect this to be happening with the FCA and across the Treasury and DWP. I would expect there would be pressure on the The Pensions Regulator too, to take a less interventionist approach.”
Much will also depend, he said, on who was appointed to replace Mark Carney as governor of the Bank of England.
Anderson said he expected this announcement in November, when the was – hopefully – a little more indication as to the direction of travel on Brexit.
Change may be even more significant if Labour are the biggest party following an election. Anderson says: “Jeremy Corbyn and John McDonnell have made it clear they are looking to put the regulatory train set together.”
This could mean combining the Competition Commission, FCA and TPR within a ‘mega-regulator’, whose “first duty” would be be to look at consumer protection.
Aside from the divergence on regulatory approach, Anderson said there was also a key difference in how each party approaches technical innovation and the move towards more digital services in the financial sector. He said there was significantly more scepticism from the Labour front bench about “the race towards digital” and they would take a more interventionist approach to regulation of the burgeoning fin tech sector.
“The attitude from some is that this ‘app-ability’ is just a faster way for companies to take money from the punter.”
Elsewhere Anderson told delegates that the “Greta Thunberg effect” was having a “palpable” effect on the wider financial services market, with issues relating to climate change and ESG moving up the political and regulatory agenda.
While Anderson said that political predictions remained difficult at present, he did not forsee a majority for either the Conservatives or Labour at the next election.
On current polling figures he said it was likely that the Conservatives would be the largest party by some margin, but would still be short of an overall majority. Much would depend on Brexit negotiations though, he said, and the strategy being pursued by Boris Johnson and Dominic Cummings that they would pick up leave voters in tLabour constituencies.
“This is a gamble. These are people who have not traditionally voted Conservative before.”
When it comes to the new governor at the BoE, Anderson said there were three frontrunners in the frame. These include Dame Helena Morrissey, former chief executive of Newton Investment Management and now head of personal investing at Legal & General Investment Managers. Other contenders include Baroness Shriti Vadera, chair of Santander Bank UK and a former government minister in the Department of Business, Innovation & Skills; and Andrew Bailey chief executive of the FCA and a former deputy governor of the BoE.
Anderson says that Bailey would be the “safe choice” but added that this would also necessitate a change at the helm of the FCA.