Navigating Change: Financial Services Special 2025
by H/Advisors Cicero
13 May 2025
Financial Services is central to the new government’s growth mission. The key ministers, now settled in their briefs, have an affinity, depth of experience, and long-term perspective which the sector has not always been able to count on in recent years.
Ministers have signalled a willingness to ease the burden of regulation, which business will want to embrace and work with; at the same time, consumer protection and improving financial inclusion will remain a strong focus, as will the need for greater resilience in a time of heightened macroeconomic and geopolitical risk.
Government will be looking to the sector as a partner in its efforts to foster a new investment culture, harnessing greater scale, widening access, and re-balancing the approach to risk and growth. Policymakers’ attention to fintech and AI will only continue to grow, as will their focus on the role of the City in the global economy, its ability to link the UK to faster-growing markets, and its potential for supporting the energy transition. Staying in touch with all these themes, as well as the sheer volume of strategies, reviews, consultations and legislation – as illustrated in the timeline and policy grid over the following pages – and assessing their potential impact, as well as fighting for airtime for the sector’s other priorities, will be a challenge.
The H/Advisors Cicero team brings the analytical clarity and strategic insight to help organisations navigate this crowded landscape, and support them in making smart and timely decisions.
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UPDATED: February 2025
The Chancellor’s 29 January speech on her plans for supply-side stimulus doubled as another opportunity to reset the Government’s public narrative. That desire for another reset is reflected in recent changes to Special Advisers across the frontbench. The areas that have been bolstered are telling. While the headline addition to the list of Special Advisers was Olaf Henricson-Bell (brother of new Pensions Minister Torsten Bell) as Head of No 10’s Policy Unit, there’s a lot that the other new appointees can tell you about the areas of focus. Namely, communications, communities, and policy.
The introduction of Jason Keen and Abby Tomlinson (of Milifandom fame) to the No.10 media operation suggests a need to address perceived communications weaknesses. Keen brings with him years of media and communications experience, from his half a decade as a producer at the BBC and later as an adviser to the Duke and Duchess of Wessex. He will undoubtedly be tasked with communicating the Government’s “Plan for Change” (a message that according to recent YouGov polling is not successfully cutting through).
Tomlinson cut her teeth leading the Milifandom movement in 2015 at just 17 years old. Prior to taking on the role in No.10, Tomlinson worked as Labour’s Acting Head of Digital and had spent two years as a Digital Content Manager for the party. Her role indicates a need to engage with an increasingly online general public, where both older and younger voters are being drawn towards the political fringes.
On the policy side, alongside Henricson-Bell, recent No.10 SpAd appointments have fallen into two buckets. Liz Lloyd and Alex Roycroft joined No.10 as Special Advisers for Policy Delivery and Innovation, and Legislation respectively. The need to deliver clear, effective policy that progresses quickly through Parliament is something that every government aims to achieve, but these new hires suggest a renewed focus on this goal. Outside of policy creation and delivery, James Carroll and Joy Johnston joined as Special Advisers for Partnership, and Faith, Communities and Civil Society. James Carroll’s Partnership role has already seen him organise webinars and meetings between key stakeholders and Ministers. Joy Johnston’s background as public servant at the Home Office and National Crime Agency will put her in good stead to help the Government respond to the events surrounding last year’s Southport attacks.
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Special Advisers (SpAds) are there to help their Minister communicate their key messages, amplify their successes and get the most out of their Department’s civil servants, e.g. through supporting and providing direction to teams working on high-priority or political sensitive topics.
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3 December 2024
After running two days over schedule, COP29 concluded on Sunday 24 November, amidst criticism from negotiators and activists. This year’s summit, held in Azerbaijan, was marred by low attendance from global leaders and concerns that the COP process is increasingly unfit for purpose. Only two G7 leaders, Keir Starmer and Giorgia Meloni, were present, raising questions about the perceived importance of this year’s event.
The tone of the conference was set early when Azerbaijan’s President, Ilham Aliyev, called fossil fuels a “gift from God” and dismissed reports of human rights abuses in his country as “fake news.” These remarks, coupled with frustrations over a lack of meaningful progress, led senior negotiators to brand COP29 “the worst COP in a decade.”
Furthermore, this marked the third consecutive conference hosted by an authoritarian, fossil fuel-rich state, and with the U.S. election results looming over the talks, the prospect of Donald Trump’s presidency further dampened hopes for progress on global climate agreements.
What was agreed at COP29
Climate Finance
Billed as the “Finance COP,” this year’s summit aimed to secure a new global funding mechanism to support developing nations in reducing emissions and adapting to climate change. While the current commitment stands at $100 billion annually, developing countries pushed for $1.3 trillion by 2030, with some estimates suggesting the need is closer to $6.7 trillion per year.
After intense negotiations, a last-minute deal was reached for $300 billion annually by 2035, with a target of $1.3 trillion by the same year. Though a step up, the amount falls drastically short of what is required. China agreed to voluntary contributions, a potential signal of its willingness to play a more active role in climate leadership, especially as U.S. involvement wanes. However, developing nations, including India and Nigeria, criticised the deal, alleging undue pressure from the host nation and expressing skepticism about whether the target will be met.
Carbon Markets
Negotiators finalised the long-awaited rules for global carbon markets under Article 6 of the Paris Agreement. While Azerbaijan’s Minister for Energy hailed the agreement, Pacific Island nations raised concerns about potential harm and inequities in the system. Nevertheless, this marked the last piece of the Paris Agreement framework to be operationalised and arguably one of the few successes of the conference.
Loss and Damage Fund
The loss and damage fund, launched at COP28, is now operational but significantly underfunded. Current contributions stand at $800 million annually—far below the estimated $724 billion needed each year to address climate-related damages in developing nations.
UK Involvement
The UK Government, under its new leadership, was actively engaged in COP29. Ed Miliband played a prominent role in securing the climate finance deal, although the UK was notably silent on Azerbaijan’s human rights record, in contrast to other leaders. As one of Azerbaijan’s largest foreign investors, the UK appears to be prioritising its economic interests, particularly in the offshore wind sector. However, with Azerbaijan already aligning with Saudi Arabia for offshore wind development, the UK risks missing out on key opportunities.
Despite this, the UK positioned itself as a vocal advocate for climate action. Whether it can translate rhetoric into meaningful leadership remains to be seen.
Looking Ahead to COP30
Criticism of the COP process continues to grow, and this year’s summit amplified calls to prevent fossil fuel-exporting nations from hosting future conferences. An open letter signed by leading negotiators and climate experts during COP29 highlighted this issue. While COP28 included a historic call for a transition away from fossil fuels, COP29 failed to produce any concrete follow-up. Discussions on fossil fuel reduction were sidelined, though the issue is expected to resurface next year.
COP30 in Brazil will focus on aligning 2025 commitments with the goal of limiting global warming to 1.5°C—a target that grows increasingly elusive. Miliband has pledged an 81% reduction in UK emissions (compared to 1990 levels) and plans to collaborate with Brazil on energy, finance, and forests over the next year.
As for COP31, Australia and Turkey are competing for the presidency. While business engagement may increase, it remains to be seen whether the COP process can overcome its reputation for slow progress and limited ambition.
For more about COP email elisabeth.reuss@h-advisors.global.
21 November 2024
Having written a Mansion House speech – effectively an exercise in trying to maintain some semblance of narrative cohesion while shoehorning over 20 policy announcements into an after-dinner speech – I have a lot of sympathy for the Chancellor’s team. However, if we were to extract themes from a speech so long it required teleprompters, they were:
- the Chancellor’s efforts to boost private investment in UK Plc and guarantees of sufficient regulatory predictability, and
- consistency to allow growth sectors to develop new products and services.
Going for growth
LGPS, and to a lesser extent, multiemployer DC scheme consolidation were the most heavily trailed announcements. The Chancellor noted that consolidating LGPS schemes into eight megafunds and setting minimum AUM levels for multiemployer DC schemes “could unlock around £80bn for investment in private equity, including exciting growth businesses and in vital infrastructure projects including transport, energy and housing projects here in the UK”.
Without mandation, however, the word “could”, could well be doing a lot of heavy lifting. LGPS funds will be asked to set investment targets for regional investment, but the primacy of the fiduciary duty remains. HM Treasury will hope that planning reforms will address the availability of local investable opportunities, but in the interim, like we saw at the International Investment Summit, the Chancellor announced public-private partnerships to deliver additional private investment over the course of this Parliament. Aegon UK and NatWest Cushon will work with the British Business Bank (BBB) to invest in UK growth companies, while Phoenix and the BBB will deliver a £500 million investment vehicle in UK science and technology.
Certainty for competitiveness
On providing certainty for key growth sectors to innovate, the long-promised commitment to issue a digital gilt via blockchain (DIGIT – because HMT, the FCA and FS SLTs love an acronym) acted as a vote of confidence in the potential of tokenisation. The National Payments Vision at the very least acknowledges the significance of the sector and the announcement of the Transition Finance Council (in partnership with the City of London Corporation), alongside a range of green finance consultations served as a statement of intent for a strategically significant market.
The launch of a call for evidence on an FS industrial strategy, naturally entitled the FS Growth and Competitiveness Strategy, is also intended to establish the Government’s approach to the sector for the next 10 years, focusing on fintech, sustainable finance, insurance and reinsurance, capital markets and asset management and wholesale services.
While long-term predictability is certainly welcome, to (poorly) paraphrase Mike Tyson, “Everyone’s got a plan till they get hit by new tech”; if this call for evidence was opened 10 years ago there’d be a lot of excitement about robo advice, as opposed to tokenisation and transition finance. As such, government will also need to signal to industry a willingness to pivot, reprioritise and co-create to gain the advantage on strategically significant innovations.
Reshaping redress
On predictability, a call for input on “modernising the redress system”, i.e. reshaping the relationship between the Financial Conduct Authority and the Financial Ombudsman Service, may provide a lot more certainty of the retail sector on consumer redress. Like her predecessor, the Chancellor may well have discovered that the Ombudsman’s independence, coupled with its ability to set precedent through its final decisions gives it a lot of influence over key sectors of the economy (like the motor industry).
In adjudicating on complaints against firms, FOS considers any applicable laws, regulation, industry codes and good practice. However, if the law and FCA rules are not sufficient to make a judgement, the Ombudsman will determine what constitutes a “fair and reasonable outcome”. The call for input could change that relationship, to allow the FCA to provide greater clarity on the potential scale of harm in mass redress cases among other measures.
There were also announcements intended to help mobilise retail capital to UK equities and productive assets, double the size of the mutuals sector and fire a shot across the bow of big tech.
Want to know more? Email dave.eaton@h-advisors.global.
20 November 2024
Last week, Partner Mairi Maclennan attended City & Financial Global’s summit on The Future of UK Capital Markets Regulation in central London. Here she gives us her four big takeaways:
1. Private markets are not going anywhere: PISCES marks a positive first step in enhancing connectivity between public and private markets. However, more effort is required to address key challenges, including valuation discrepancies, share transfer mechanisms, and cultural differences. All eyes will be on the Bank of England’s SWES later this month, the first comprehensive regulatory assessment of the NBFI sector.
2. Support UK start-ups from the get go: Strategic decisions on listings are influenced from the outset of a company’s development. The US has established a successful track record of supporting start-ups from early stages with a natural bias towards eventual US listings. UK pension funds should leverage their position to foster the growth of UK start-ups, encouraging more companies to list in the UK.
3. Focus on fundamentals, not mandation: A clear, well-articulated industrial strategy will be more effective in attracting investment and enhancing the UK’s international competitiveness than mandation. Any push towards mandation raises significant concerns regarding firms’ fiduciary duties and could be counterproductive to long-term growth.
4. Tell Sid 2.0: The UK continues to lag behind in retail investment. Labour’s pre-election Financing Growth report promised an updated “Tell Sid” campaign to drive retail investment in UK assets. However, detailed plans have yet to emerge. Successfully delivering this could be crucial in strengthening voter engagement with the Government’s Growth Mission and demonstrating its tangible benefits to the public.
To find out more, get in touch with our team: ukpublicaffairs@h-advisors.global
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18 July 2024
King Charles III’s speech marks the beginning of the new Labour Government’s legislative priorities, featuring 40 bills, an unusually high number. This ambitious agenda reflects the Government’s determination to implement sweeping changes, but it also poses challenges for parliamentary scrutiny and timely implementation. Including the risk of legislative bottlenecks, not least with four bills remaining in draft form, which suggests they are unlikely to pass in this session.
But what does the volume of content in the King’s Speech tell us about this Government’s ambitions?
A clear vision
The programme reflects Labour’s five core missions: economic stability and growth; establishing the UK as a clean energy superpower; securing borders and tackling antisocial behaviour; breaking down barriers to opportunity; and health. Despite initial pushback, framing the legislative agenda around these missions sets a clear framework for Labour’s vision.
Priorities
Economic stability and growth are major priorities, with 15 of the 40 bills dedicated to this goal. Key bills include the Budget Responsibility Bill, which establishes independent assessment by the Office for Budget Responsibility (OBR); the National Wealth Fund Bill, creating a statutory basis for the National Wealth Fund; and the Planning and Infrastructure Bill, aimed at driving infrastructure development.
The exclusion of other flagship legislation, like extending voting rights to 16-year-olds, shows the Government’s focus on consolidating its agenda to deliver on main priorities.
There has been some flexibility to the mission centred approach with Bills introduced recognising a response to geopolitical tensions is needed. Additional legislation on national security, including the Cyber Security and Resilience Bill, has been announced in an effort to ensure stability and prioritise national security.
The programme also represents a continuation of areas the previous Government looked at, including regulation on Tobacco & Football Governance, while a change in tack on Employment and Planning regulation is clear.
Treasury back on top?
Approximately five of these 15 growth bills will sit with the Treasury, which takes on a larger share of legislation than had previously been anticipated given the inclusion of two unreported financial services bills; including the Pensions Schemes Bill and the Bank Resolution (Recapitalisation) Bill.
The remaining 10 sit across other Government departments including the rebranded Ministry of Housing, Communities and Local Government, the Department for Transport and the Ministry of Justice, an embodiment of Starmer’s ambition to embed his missions across Whitehall and promote cross-departmental collaboration.
Challenges
Certain bills are expected to spark debate, such as the Planning and Infrastructure Bill, likely to face opposition from the Liberal Democrats over greenbelt development, and the Border Security, Asylum, and Immigration Bill, which could face challenges from Reform UK benches. With a significant majority in the Commons, the Government is well-positioned to overcome opposition amendments. However, loyalty from backbenchers, especially newly elected Labour MPs with narrow majorities, will be crucial.
Next Steps
The first Bills could be introduced as early as tomorrow, with Second Reading scheduled after the King’s Speech debate concludes on 25 July. There is speculation that Friday 26 July might be declared an official sitting day to expedite progress before the summer recess.
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