By David Milliken and William Schomberg
LONDON (Reuters) -British finance minister Rachel Reeves announced on Tuesday a push to get more savers investing in company shares and to rein in regulators, as a way to boost the country’s financial services sector and the overall economy.
Reeves also confirmed an easing of access to mortgages, a reduction in some capital requirements for mid-sized banks and simpler regulatory approvals for smaller financial services companies.
“We need to double down on our global strengths to put the UK ahead in the global race for financial businesses,” Reeves said in a statement ahead of her annual Mansion House speech to London’s finance industry later in the day.
Reeves and Prime Minister Keir Starmer have promised voters that they will speed up Britain’s slow economy but after a year in power that ambition has largely eluded them, raising fears that taxes will have to go up to balance the public finances.
Last month, the government announced a 10-year industrial strategy that included the financial services sector, which is facing tough competition from other countries including the United States and members of the European Union.
The details of the finance reforms were welcomed by a representative of the industry.
“The City of London has long called for a joined-up approach to boost the City and the wider UK economy, and I am pleased to see action on priorities we’ve championed,” Chris Hayward, policy chairman at City of London Corporation, said.
From April next year, the Financial Conduct Authority – a regulator which oversees the finance industry – will allow banks to alert customers about specific investment opportunities so they can consider shifting money from low-return current accounts, Reeves said.
Before then, banks will run an advertising campaign to promote share investments.
Regulators will review the risk warnings given for different types of financial investments.
The finance ministry said Britain had the lowest level of retail investment among the Group of Seven rich countries.
A survey by fund managers Aberdeen showed that Britons invest 8% of their savings in shares or mutual funds compared with 9% in Germany and Japan, although this does not include pension savings which in Britain are often invested in equities.
Reeves considered reducing the tax incentives for savers using cash-only Individual Savings Accounts as way to increase investment in stocks and shares. But such a change could raise financing costs for some lenders. The Treasury said it would continue to consider ISA reforms.
As well as consumers, Reeves has targeted British pension funds as a source of investment that could boost growth.
Other changes announced by the Treasury on Tuesday included requiring the Financial Ombudsman Service to stick more closely to FCA rulings when resolving consumers’ disputes and for the FCA to review how its consumer duty rules are applied in business-to-business disputes.
The Senior Managers and Certification Regime – set up after the 2008 financial crisis to ensure bankers can be held personally accountable for misconduct – will be streamlined, the finance ministry said.
The Bank of England on Tuesday announced a series of changes to help banks free up capital, including a delay to the implementation of part of the Basel banking reforms governing banks’ trading activities to 2028.
The government reiterated that it would reform the ring-fencing regime, which separates banks’ retail and investment banking businesses, without providing details.
(Additional reporting by Sachin Ravikumar; writing by David Milliken and William Schomberg; Editing by Susan Fenton)
