Labour’s July 4th landslide victory came as little surprise, marking both the end of the Conservative’s 14-year rule and a critical moment for the future of financial services. What does Kier Starmer’s Labour government mean for UK firms? Will there be a fundamental sea change in the way the nation regulates key industries?
Change
While it’s too early to say what that practical change might look like in action, it’s clear that Labour is interested in greater regulatory transparency. From Whistleblowing reforms to a new sustainability agenda, Labour’s manifesto (broadly speaking) lays the foundation for what Starmer is calling a ‘mission-driven government.’
The details on how this will directly impact regulation in financial services are noticeably light, although recent announcements hint at the direction the party is taking, with audit and corporate governance hailed as a priority for Starmer’s Labour party as firms await long-overdue reforms.
For example, speaking to the Financial Times back in September 2023, Jonathan Reynolds, now Secretary of State for Business and Trade, confirmed that Labour would replace the FRC (Financial Reporting Council) with ARGA (Audit, Reporting and Governance Authority), a change that’s been held-off for a good few years now.
Moreover, Labour have announced their desire to break the spell of what The Guardian once called ‘Political Short-Termism,’ echoed in Labour’s Manifesto with the words ‘Britain has been held back by governments that, because they lack a relentless focus on long-term ends.’
Labour announced it would establish a new ‘Regulatory Innovation Office’ (RIO) in October 2023, a body designed to hold regulators accountable for delays in decision-making, although we’re yet to hear updates on its implementation.
The Green Finance Capital of the World
ESG and sustainable finance is a key part of Labour’s plans, with Starmer stating his intent to make the UK the ‘Green finance capital of the world,’ following the previous government’s stark U-turns on green policy.
This is comprised of initiatives like Great British Energy, the race to reach net zero by 2050, and reforms to the water and energy sectors representing significant regulatory change. For example, Labour plans to enhance regulatory power to increase fines for compliance breaches and block executive bonuses.
We may be able to expect stronger relations between the UK and the EU as a result of Labour’s commitment to re-joining the race to net zero, and more recently, Starmer’s desire to fix the ‘botched’ Brexit deal.
Decision-makers in the energy and finance spaces are understandably calling out for policy stability – given Labour’s majority (one of the largest in British history), this is something we might be in a position to expect.
An Increasing Compliance Burden
Whatever lies ahead, firms have been feeling an increased compliance burden for a while – long hours, understaffed functions, unclear guidelines, a lack of training, and no seat at the table are some of the more common complaints we’ve heard over the last few years. As Financial News London puts it: ‘All of the Responsibility, None of the Power.’
We recognise the need to act early, swiftly, and precisely during any time of great change. The FCA’s Consumer Duty Act is a prime example (a landmark ruling that firms are still struggling to grapple with). Our specialist compliance recruiters are on hand to advise those hoping to strengthen their talent pipeline – times of change represent times of even greater opportunity for forward-thinking employers. Contact us here for a free consultation: https://www.broadgatestaffing.com/contact-us.
