Latest news with #FinancialServicesGrowthandCompetitivenessStrategy
Observer
3 days ago
- Business
- Observer
Finance chiefs call for ‘clearer' tax policy
UK Chancellor, Rachel Reeves, is facing pressure to provide a 'clearer, more stable tax environment,' when she delivers her growth strategy next month. The Chancellor is once again in the spotlight after a damning report from finance bosses indicated the industry was prepped to support growth ambitions, but structural barriers were holding them back. Top players in the financial services ecosystem – KPMG, UK Finance and PIMFA (Personal Investment Management & Financial Advice) – said 'potential will remain untapped unless underlying structural challenges' are addressed'. The report said reforms to tax policy posed a 'valuable opportunity' to drive up greater confidence'. Business confidence sank in the fall out of Reeves' maiden Budget, where taxes were hiked £40bn. The Chancellor's controversial change to employer's national insurance came into effect last month, with rates for firms upped 1.2 per cent to 15 per cent. Managing director of personal finance at UK Finance, Eric Lendeers, said: 'Investors and firms need stability to make informed decisions and to invest for the future. Mixed signals on taxation only compound the problem.' He added it was crucial to avoid 'knee-jerk reactions' on tax policy. The Chancellor is facing mounting speculation of another tax hike after it was calculated half of her £9.9bn in fiscal headroom had been wiped out just 48 hours after the Spring Statement. Chief executive at PIMFA, Liz Field, said: 'Uncertainty surrounding non-dom tax status has driven more capital and talent overseas which impacts UK investment and competitiveness.' Field added: 'Frequent shifts and speculations around issues like tax-free cash, pensions, and ISAs undermine confidence and disrupt financial planning for clients.' Reeves inaugural Financial Services Growth and Competitiveness Strategy is pencilled in for 15 July, where the industry will be anticipating the Chancellor's plans to boost the economy. Chancellor of the Exchequer Rachel Reeves gives a speech at the Treasury in London, Britain. — Reuters Partner at KPMG UK, Daniel Barry, said: 'As risk to the UK's finance stability are rising, the government has a significant opportunity to instil greater confidence among sector leaders at a time of great uncertainty and geopolitical volatility.' The report from KPMG, UK Finance and PIMFA compiles views from chief executives and senior leaders across the private bank and wealth management industry, as well as financial advice and related services. The sector holds over £1.6 trillion in assets and bosses said reforms were needed to 'unlock the full potential'. Field said: 'There's a concern across our sector that without a more stable, proportionate and joined-up policy environment, we risk missing a vital opportunity to unlock investment, drive innovation, and promote greater financial resilience across society.' A separate issue that is causing concern to firms in the UK is the Employment Rights Bill which is currently progressing through parliament and expected to become law in the coming months. Small business owners would continue hiring new staff despite fears around the government's workers' rights package if it contained a rebate on the overhaul's new sick pay rules. According to a poll by the Federation of Small Businesses (FSB), 35 per cent of entrepreneurs and small business owners believe that a rebate for their firms over sick pay would make them to employ people currently out of work. The government claims its Employment Rights Bill represents the biggest overhaul of workers' rights in a generation. Other important changes within the package include outlawing 'exploitative' zero-hours contracts and so-called 'fire and rehire' practices. Under the current package, bosses have to grant staff statutory sick pay from their first day of employment, removing the current waiting period of three days. But small businesses fear the sick pay reform will cost them millions and deter them from taking on new employees. Of the 92 per cent of FSB members that have concerns about the workers' rights bill, 74 per cent believe they will recruit fewer workers. Executive director of the FSB, Craig Beaumont, said the spending review was an opportunity for the Chancellor to incorporate the sick pay demands of small businesses.
Observer
14-05-2025
- Business
- Observer
Chancellor woos fintech and needs to deliver
In a keynote speech at Innovate Finance's 11th global summit, the chancellor Rachel Reeves confirmed the Treasury's inaugural Financial Services Growth and Competitiveness Strategy would be published on July 15. Reeves has lauded the industry's growth and touted the achievements of fintech. She pledged to make the Uk 'one of the best places in the world for fintech to start-up and to list.' The eyes of the industry are set on July, when Reeves' commitment to fintech will be on trial and fintech leaders will be the judge. The chief executive of London-based firm Curve, Schachar Bialick, said 'Fintech must be a priority because it touches every aspect of modern economic life. 'From spending to saving to financial wellbeing, fintech is the infrastructure layer of the digital economy. Right now, the sentiment is hopeful, but cautious. Firms are watching closely to see whether the government will turn policy into meaningful reform.' She added: 'Sentiment is clear: optimism hinges on delivery.' Curve, a challenger to Apple Pay, was valued at $781m (£587m) in a 2024 funding round. But the fintech has since retreated from the US market, cutting more than 100 jobs and posting a loss of £36m. The fintech's chief said: 'The most impactful move the chancellor can make is to level the playing field – ensuring fintech can compete fairly with Big Tech. That begins with infrastructure access.' The European Union has mandated Apple to open access to NFC technology for third party mobile wallet providers, including those that are not Apple Pay. 'If the government is serious about backing British fintech, it must act decisively and mirror Europe's approach. This one move would unleash a wave of innovation in mobile payments and strengthen the UK's position as a fintech leader,' Bialick said. During her speech, Reeves hailed the UK as the top spot for fintech investment – second only to the US. But a report from KPMG revealed investment had fizzled since 2021 and hit a four-year low in 2024 at £7.9bn. Private equity boss Rami Cassis said: 'We'll need to see bold measures from the government for it to succeed. At the moment it's all talk, and we need to see far greater action.' He added: 'The fact is that the UK's fintech industry still has some mountains to climb –they have only been built higher by the actions of this government.' Cassis, the chief executive of Parabellum Investments, cited the government-triggered non-dom exodus which 'drove out an important group of investment banking professionals who were incredibly involved in the sector'. Investment bankers are crucial for any UK fintech firm setting their sights on an IPO. Non-doms made up a sizeable chunk of the UK's bankers, and the Labour Party's policy change has left a large gap to fill. He added: 'The impact has been severe, with the likes of Zurich, Frankfurt and Paris beginning to build up their fintech footprint at London's expense.' Allica Bank's chief executive Richard Davies said the firm was 'hearing good things from the Chancellor' but warned 'we can't take (fintech's) success for granted.' The digital bank was dubbed Europe's fastest growing start-up by sifted and the UK's fastest growing private company by The Times Hundred. The growth of UK fintech has exploded in recent years as giants Monzo and Revolut became household names and a fleet of new firms entered the scene. chief marketing officer Rory O'Neil consigned regulation woes and added a 'strong fintech talent pipeline' should be a key area of focus in the Treasury's strategy. He warned: 'Failure to deliver on either risks slowing down growth for scaling fintechs, and worse, makes the UK less attractive to future start-ups and scale-ups.' The strategy will mark a critical juncture for the industry with momentum set to speed ahead or be derailed. (The writer is our foreign correspondent based in the UK) Andy Jalil The writer is our foreign correspondent based in the UK.
Yahoo
30-04-2025
- Business
- Yahoo
Barclays chief mounts defence of ring-fencing as rivals push for abolition
The chief executive of Barclays has launched a staunch defence of Britain's bank ring-fencing regime even as his main rivals lobby the government to abolish it less than a decade after its introduction. Speaking exclusively to Sky News, CS Venkatakrishnan said the protection that ring-fencing provided to bank depositors outweighed the costs of implementing and administering the system. His defence of ring-fencing - introduced as part of Britain's response to the 2008 financial crisis - pits Mr Venkatakrishnan firmly against the bosses of HSBC Holdings, Lloyds Banking Group, NatWest Group and Santander UK, who wrote to Rachel Reeves, the chancellor, last week to warn that the regulatory framework was inhibiting lenders' ability to help drive UK economic growth. Money latest: Boost for 1.2 million families on Universal Credit "The point that the other banks make about a bit of friction, trapped capital and administrative costs are correct," Mr Venkatakrishnan said. "However, there are two counterpoints: we have spent the money on the set-up and we make it work; but the more important fact is that you have to weigh against this the immense amount of depositor protection that the ring-fencing regime gives the country. "The ring-fencing regime is a very good one and a very strong one. "Depositor protection is the single-most important element of the banking system and the single-most important part of banks' engagement with society. "I don't think ring-fencing should be relaxed or scrapped." The ring-fencing regime establishes a 'firewall' between banking groups' retail arms and their investment banking operations, protecting either if the other were to run into serious financial difficulties. Barclays' decision not to sign the joint letter from the CEOs of the biggest UK banks surprised some of his peers at a time when the chancellor is spearheading a push to slash red tape across the economy. On Wednesday, Barclays unveiled first-quarter results showing a better-than-expected revenue performance in its investment banking division. The bank said group profit before tax rose 19% year-on-year to £2.7bn. Earlier this week, the HSBC chief executive Georges Elhedery confirmed that he was backing the push to scrap ring-fencing. In their joint letter, the quartet of bank chiefs told Ms Reeves that: "With global economic headwinds, it is crucial that, in support of its Industrial Strategy, the government's Financial Services Growth and Competitiveness Strategy removes unnecessary constraints on the ability of UK banks to support businesses across the economy and sends the clearest possible signal to investors in the UK of your commitment to reform. "While we welcomed the recent technical adjustments to the ring-fencing regime, we believe it is now imperative to go further. "Removing the ring-fencing regime is, we believe, among the most significant steps the government could take to ensure the prudential framework maximises the banking sector's ability to support UK businesses and promote economic growth." Banks spent billions of pounds designing and setting up their ring-fenced entities, with separate boards of directors appointed to each division. More recently, the Treasury has moved to increase the deposit threshold from £25bn to £35bn, amid pressure from a number of faster-growing banks. Read more from Sky News:The people and events that defined my 11 years at Sky News - Ian King Trump declares he is 'just getting started' after 100 day milestoneBurberry checks out contenders for new chairman Sam Woods, the current chief executive of the main banking regulator, the Prudential Regulation Authority, was involved in formulating proposals published by the Sir John Vickers-led Independent Commission on Banking in 2011. Legislation to establish ring-fencing was passed in the Financial Services Reform (Banking) Act 2013, and the regime came into effect in 2019. In addition to ring-fencing, banks were forced to substantially increase the amount and quality of capital they held as a risk buffer, while they were also instructed to create so-called 'living wills' in the event that they ran into financial trouble. The chancellor has repeatedly spoken of the need to regulate for growth rather than risk - a phrase the four banks hope will now persuade her to abandon ring-fencing. Britain is the only major economy to have adopted such an approach to regulating its banking industry - a fact which the bank chiefs say is now undermining UK competitiveness. "Ring-fencing imposes significant and often overlooked costs on businesses, including SMEs, by exposing them to banking constraints not experienced by their international competitors, making it harder for them to scale and compete," the letter said. The four bosses called on Ms Reeves to use this summer's Mansion House dinner - the City's annual set-piece event - to deliver "a clear statement of intent…to abolish ring-fencing during this Parliament". Doing so, they argued, would "demonstrate the government's determination to do what it takes to promote growth and send the strongest possible signal to investors of your commitment to the City and to strengthen the UK's position as a leading international financial centre".
Sky News
30-04-2025
- Business
- Sky News
Barclays chief mounts defence of ring-fencing as rivals push for abolition
The chief executive of Barclays has launched a staunch defence of Britain's bank ring-fencing regime even as his main rivals lobby the government to abolish it less than a decade after its introduction. Speaking exclusively to Sky News, CS Venkatakrishnan said the protection that ring-fencing provided to bank depositors outweighed the costs of implementing and administering the system. His defence of ring-fencing - introduced as part of Britain's response to the 2008 financial crisis - pits Mr Venkatakrishnan firmly against the bosses of HSBC Holdings, Lloyds Banking Group, NatWest Group and Santander UK, who wrote to Rachel Reeves, the chancellor, last week to warn that the regulatory framework was inhibiting lenders' ability to help drive UK economic growth. "The point that the other banks make about a bit of friction, trapped capital and administrative costs are correct," Mr Venkatakrishnan said. "However, there are two counterpoints: we have spent the money on the set-up and we make it work; but the more important fact is that you have to weigh against this the immense amount of depositor protection that the ring-fencing regime gives the country. "The ring-fencing regime is a very good one and a very strong one. "Depositor protection is the single-most important element of the banking system and the single-most important part of banks' engagement with society. "I don't think ring-fencing should be relaxed or scrapped." The ring-fencing regime establishes a 'firewall' between banking groups' retail arms and their investment banking operations, protecting either if the other were to run into serious financial difficulties. Barclays' decision not to sign the joint letter from the CEOs of the biggest UK banks surprised some of his peers at a time when the chancellor is spearheading a push to slash red tape across the economy. On Wednesday, Barclays unveiled first-quarter results showing a better-than-expected revenue performance in its investment banking division. The bank said group profit before tax rose 19% year-on-year to £2.7bn. Earlier this week, the HSBC chief executive Georges Elhedery confirmed that he was backing the push to scrap ring-fencing. In their joint letter, the quartet of bank chiefs told Ms Reeves that: "With global economic headwinds, it is crucial that, in support of its Industrial Strategy, the government's Financial Services Growth and Competitiveness Strategy removes unnecessary constraints on the ability of UK banks to support businesses across the economy and sends the clearest possible signal to investors in the UK of your commitment to reform. "While we welcomed the recent technical adjustments to the ring-fencing regime, we believe it is now imperative to go further. "Removing the ring-fencing regime is, we believe, among the most significant steps the government could take to ensure the prudential framework maximises the banking sector's ability to support UK businesses and promote economic growth." Banks spent billions of pounds designing and setting up their ring-fenced entities, with separate boards of directors appointed to each division. More recently, the Treasury has moved to increase the deposit threshold from £25bn to £35bn, amid pressure from a number of faster-growing banks. Sam Woods, the current chief executive of the main banking regulator, the Prudential Regulation Authority, was involved in formulating proposals published by the Sir John Vickers-led Independent Commission on Banking in 2011. Legislation to establish ring-fencing was passed in the Financial Services Reform (Banking) Act 2013, and the regime came into effect in 2019. In addition to ring-fencing, banks were forced to substantially increase the amount and quality of capital they held as a risk buffer, while they were also instructed to create so-called 'living wills' in the event that they ran into financial trouble. The chancellor has repeatedly spoken of the need to regulate for growth rather than risk - a phrase the four banks hope will now persuade her to abandon ring-fencing. Britain is the only major economy to have adopted such an approach to regulating its banking industry - a fact which the bank chiefs say is now undermining UK competitiveness. "Ring-fencing imposes significant and often overlooked costs on businesses, including SMEs, by exposing them to banking constraints not experienced by their international competitors, making it harder for them to scale and compete," the letter said. The four bosses called on Ms Reeves to use this summer's Mansion House dinner - the City's annual set-piece event - to deliver "a clear statement of intent…to abolish ring-fencing during this Parliament". Doing so, they argued, would "demonstrate the government's determination to do what it takes to promote growth and send the strongest possible signal to investors of your commitment to the City and to strengthen the UK's position as a leading international financial centre".
Mint
28-04-2025
- Business
- Mint
HSBC, Lloyds CEOs Among UK Bankers Seeking End of Ring-Fencing: Sky
The chief executive officers of four of Britain's largest banks have called on the Chancellor of the Exchequer to abolish so-called ring-fencing rules. HSBC Holdings Plc's Georges Elhedery and Charlie Nunn of Lloyds Banking Group Plc said in a letter to Rachel Reeves this week that the regulations, which require banking groups to separate their retail banking services from their investment and international banking activities, are a drag on the banks' ability to support the economy and have become 'redundant,' according to people familiar with the matter. NatWest Group Plc's CEO Paul Thwaite and Mike Regnier, who runs the UK arm of Banco Santander SA, also signed the letter, said the people, who asked not to be identified disclosing private correspondence. The rules were a central pillar of the UK government's response to the global financial crisis in 2008 and are aimed at protecting Britain's retail banking from shocks emanating from elsewhere. Since then, they have been criticized for being overly rigid and placing unnecessary constraints on banks. In their letter to the chancellor, which was first reported by Sky News, the bank chiefs said the government should get rid of 'unnecessary constraints' on the ability of lenders to support businesses across the UK economy. 'Removing the ring-fencing regime is, we believe, among the most significant steps the government could take to ensure the prudential framework maximises the banking sector's ability to support UK businesses and promote economic growth,' the letter said, according to Sky. 'Ring-fencing imposes significant and often overlooked costs on businesses, including SMEs, by exposing them to banking constraints not experienced by their international competitors, making it harder for them to scale and compete,' the letter said. 'Lending decisions and pricing are distorted as the considerable liquidity trapped inside the ring-fence can only be used for limited purposes.' The rules also cause capital inefficiencies and impact negatively on Britain's standing in the world, the CEOs said. 'There has been a material decline in UK wholesale banking since ring-fencing was introduced, to the detriment of British businesses and the perception of the UK as an internationally orientated economy with a global financial centre,' the CEOs said. Representatives for HSBC, NatWest and Santander declined to comment, while Lloyds didn't immediately respond to requests for comments sent on Saturday. In response to questions about the letter, the Treasury said that banking is 'critical' to the government's top priority of delivering economic growth. 'That's why the Chancellor has set out a new approach to regulation that supports growth, instead of excessively focusing on risk, and why we are co-designing the first-ever Financial Services Growth and Competitiveness Strategy with industry,' a Treasury spokesperson said. This article was generated from an automated news agency feed without modifications to text. First Published: 28 Apr 2025, 01:34 PM IST
