Following the General Election victory for the Labour Party in the UK, incoming Chancellor Rachel Reeves said: “We will take on the hard work of reforming our public services, to make them fit for the future. We will work closely with our national, regional and local leaders to power growth in every part of Britain.”
Labour said in its January Plan for Financial Services it would embrace innovation and fintech as the future of financial services by:
- becoming a global standard-setter for the use of AI,
- delivering the next phase of Open Banking,
- defining a roadmap for Open Finance,
- embracing securities tokenization and a central bank digital currency,
- establishing a regulatory sandbox for financial products to reach underserved communities.
Labour also seems committed to protecting consumers, not least by tighter regulation of Buy Now Pay Later (BNPL) schemes.
Plans for a Central Bank Digital Currency (CBDC) will also continue, with the setting up of a regulatory sandbox for testing financial products.
“With Labour, regulation will be stable and predictable, and guided by a set of priorities crucial to the success of the sector: efficient, proportionate, incremental, and co-ordinated across government,” the party added. “Labour supports the efforts of the Joint Regulatory Oversight Committee (JROC) to lay out the roadmap for the next phase of Open Banking and ensure appropriate consumer protections are in place.”
Riccardo Tordera, Director of Policy at The Payments Association, told IFA Magazine he welcomes Labour’s promise to cut through regulatory red tape, which he believes will help maintain the UK’s status as a financial powerhouse.
Meanwhile, Becky O’Connor of PensionBee said Labour’s approach was encouraging, especially its support for streamlining regulations and the focus on outcomes, which aligns with the FCA’s Consumer Duty.
The effects of the change in government policy on the wider economy remain to be seen.
“While Labour’s landslide victory provides a stable backdrop, it’s not going to be the primary driver of the gains we predict for UK stocks this year,” Nigel deVere, CEO, deVere Group, said. “The ultra-low valuations are the true attraction, and history suggests they won’t linger forever.”
PA advocates for tech levy
Trade body The Payments Association (PA) has strongly urged the incoming Chancellor to impose a “tech levy” on social media firms and use the funds to compensate victims of authorized push payments (APP) fraud.
The PA argues that the proposed reimbursement threshold of £415,000 is excessively high, and should be lowered to a much more modest £30,000 to cover 95% of cases.
The PA suggests delaying the implementation of the new reimbursement rules by 12 months to allow for the necessary infrastructure, such as Pay.UK’s case management system and effective dispute resolution mechanisms, to be fully operational and tested. Such a delay would help ensure a smoother transition and better compliance across the industry.
The association calls for involving more stakeholders, such as social media platforms and telecom providers, to combat fraud. These entities should share the cost burden of reimbursements and participate in fraud prevention measures since a significant portion of fraud originates from these platforms.
