UK Chancellor of the Exchequer’s Mansion House speech (14 November 2024) – summary of key initiatives

At her inaugural Mansion House speech on 14 November 2024, the Chancellor of the Exchequer outlined a number of key policy initiatives for the UK financial services sector.

This is the first major announcement for the new government regarding its intentions for the financial sector. The message behind the proposals is that the government is looking to promote economic growth and that it sees the financial services sector playing a central part in that.

The main policy initiatives that were announced are set out below. More detailed commentary on some of the main initiatives will follow separately.

Regulating for growth

The Chancellor said that the UK has been regulating for risk, but not regulating for growth, and that it was time to take forward the next stage of reforms needed to drive growth, competitiveness and investment.

In that regard, the Chancellor has issued new growth-focussed remit letters to the FCA, the Bank of England’s Prudential_Regulation_Committee and Financial Policy Committee and both the FCA and the Payment Systems Regulator in relation to payments regulation.

Reform of consumer redress systems

Ahead of the Mansion House speech, the government had trailed its intention to reform the avenues for consumer redress, including to modernise the operations of the FOS and give consumers and firms more clarity.

In her speech, the Chancellor announced two developments relating to the FCA and the Financial Ombudsman Service (FOS):

• The FCA and FOS have issued a joint Call for Input entitled “Modernising the Redress System”. The Call for Input is seeking views on a range of issues, in particular the problems that mass redress events and redress system in general cause to regulated firms, consumers and their representatives.
• The FCA and FOS have entered into an updated Memorandum of Understanding (MoU) regarding how they co-operate and consult with each other in the exercise of their roles and respective functions. The Chancellor noted that the MoU would set clearer expectations on how the two institutions co-operate, including on historic market practice and mass redress events.

Financial Services Growth and Competitiveness Strategy

In Spring 2025, the government will publish a Financial Services Growth and Competitiveness Strategy. The stated intention is to deliver long-term certainty and cement the sector’s place at the heart of the government’s 10-year modern Industrial Strategy.

A Call for Evidence has been published, to coincide with the Mansion Speech, which sets out the government’s thinking in more detail.

The government proposes focusing on five priority growth opportunities in financial services, namely: FinTech, sustainable finance, asset management and wholesale services, insurance and reinsurance, and capital markets. 

The government suggests that an element of the strategy will be strengthening partnerships with established and fast-growing financial centres.  The Chancellor also noted in her speech that she would be looking to reset the UK’s relationship with the EU.

The industry is invited to contribute to the development of the new Strategy, ahead of the Strategy’s publication next Spring.

Pensions reform

The government launched a Pensions Investment Review in July 2024, and the Interim Report was published to coincide with the Mansion House speech. The interim report sets out the government’s plans, which will be legislated for in a Pension Scheme Bill in 2025. 

The proposals include the following:

• The assets of the Local Government Pension Scheme in England and Wales, which are currently worth approximately £350bn and split across 86 different administering authorities, will be consolidated into eight “megafunds”, which will be run by professional fund managers and authorised by the FCA. These megafunds will mirror set-ups in Australia and Canada, where the larger fund size enables them to invest in a wider range of assets. The hope is that this will enable pensions capital to become available to support the development of British start-ups, scale-ups or to meet the UK’s infrastructure needs. The proposals are set out in a Consultation paper.
• In relation to defined contribution (DC) pension schemes, a separate Consultation sets out proposals to legislate for a minimum size and maximum number of DC pension scheme default funds.  The consultation also proposes to enable contractual overrides for contract-based pension arrangements, subject to appropriate member protections. These measures would aid a shift to fewer, larger schemes.

PISCES - a trading venue for private company shares

The government announced that it will introduce what it describes as “world first” trading venue for shares in private companies. The initiative, which is known as the Private Intermittent Securities and Capital Exchange System (PISCES), will allow secondary trading in securities already issued by private companies.  These transfers will be exempt from stamp duty.

Following a consultation that closed in April 2024, the government has now published the Consultation Response, together with the draft legislation and an accompanying policy note. The Chancellor said that the legislation to establish the PISCES regime will be introduced in May 2025.

Sustainable finance

To coincide with the Mansion House speech, HM Treasury:

• published the results of its Consultation Response in relation to the regulation of ESG ratings providers, together with draft legislation; and
• issued a new Consultation on the value case for a UK Green Taxonomy.

In addition, the government:

• announced its intention to consult on streamlined sustainability disclosures for economically significant companies, using future UK Sustainability Reporting Standards; and
• launched a set of integrity principles for voluntary carbon and nature markets, ahead of a consultation in the new year.

The government will be co-launching a Transition Finance Council alongside the City of London Corporation. This was one of the recommendations of the Transition Finance Market Review.

The government also announced that it will consult in the first half of 2025 on how best to take forward its manifesto commitment on transition plans in support of its ambition to become the global hub for transition finance - ensuring the UK’s regulatory framework is growth-focused, internationally competitive and maintains the UK’s status as a global financial hub.

The government has also emphasised the transition to net zero in the government’s economic strategy within the remit of the Bank of England’s Monetary Policy Committee, and reinstated sustainable finance as an area the Financial Policy Committee should support as part of its secondary objective.

The National Payments Vision

To coincide with the Mansion House speech, the government published its National_Payments_Vision, which it describes as including decisive action to progress Open Banking and support fintech businesses.

The National Payments Vision responds to the findings of the independent Future of Payments Review 2023, which was led by Joe Garner.

Insurance and mutual societies

In relation to insurance:

• A Consultation has been published regarding the introduction of a new framework for captive insurance has been published. The consultation considers various ways to make the UK a more attractive place for the establishment of captive insurers, including the possibility of lower capital requirements, reduced reporting requirements and a faster authorisation process.
• The government will consider further steps to improve the UK’s Insurance Linked Securities Offer.

To support the mutuals sector, the government:

• launched a Call for Evidence on the credit union “common bond”;
• asked the PRA and FCA to report on the current mutuals landscape in 2025; and
• welcomed the establishment of an industry-led Mutuals Council, to drive growth in the sector.

Digital gilts instrument

The government announced that it will be launching a pilot to delivering a digital gilt instrument (known as DIGIT), using distributed ledger technology.

Senior Managers and Certification Regime (SMCR)

The Chancellor said that some elements of the SMCR have become overly costly and administratively burdensome.

HM Treasury, the FCA and PRA will shortly publish the results of the review of the SMCR that it undertook following a discussion paper and Call for Evidence in 2023. 

Among the matters that will be consulted on is the removal of the current Certification Regime. Under the current Certification Regime, staff below the senior management level must be certified by their firms not less than annually as being fit and proper to perform their roles. The intention is that this will be replaced with a more proportionate approach that reduces costs for financial services firms.

Pay deferrals

In October 2024, the PRA announced its intention to consult on reducing the current pay deferral periods that apply to certain senior managers at banks and building societies from seven years to five years. The Chancellor said that the government supports the PRA’s intention to consult on this issue.

Reforming the UK Markets in Financial Instruments Directive

HM Treasury announced its next steps for reforming the UK’s Markets in Financial Instruments Directive (MiFID) framework:

• Following the events in the Nickel market in March 2022, the government is ensuring that the FCA has the necessary tools to appropriately oversee the off-exchange trading of commodity derivatives, while maintaining the international competitiveness of these markets.
• The government will commence the revocation of the detailed requirements in legislation that govern the organisation and operation of investment firms, as well as those relating to transaction reporting, so that the regulators can deliver a more proportionate, streamlined and agile framework in regulatory rules.