In this week’s Policy update, we deep-dive into today’s King’s Speech, unpacking what the government’s 40 legislative bills mean for FinTech.
Marking the State Opening of this new Parliament, the King’s Speech outlines the legislative priorities of the new government. This legislative agenda will be “mission led and based on security, fairness and opportunity for all”. Exact detail on the finer details and passage of these bills will become clearer over the coming months.
There are a number of Bills relevant to FinTech, including the Digital Information and Smart Data Bill, the National Wealth Fund Bill, and the Bank Resolution (Recapitalisation) Bill.
What does the King’s Speech mean for FinTech?
Here is a description of all the relevant Bills announced with a description from the government’s briefing documents.
An early win for FinTech: Building a Smart Data economy
We welcome the introduction of the Digital Information and Smart Data Bill, which carries over provisions within the previous Data Protection and Digital Information Bill, including the creation of Smart Data schemes and extending digital identity products and services. We identified this as a top priority in our FinTech Plan for Government. This will provide the legal powers to unlock the full potential of Open Banking and put it on a long-term sustainable footing. It will also enable Smart Data to continue to be developed and introduced in areas such as finance, energy and transport. Digital verification will enable solutions that widen access to finance for all and combat fraud.
Buy-Now Pay-Later (BNPL) regulation
There was no mention of regulating BNPL in today’s King’s Speech. This should not be a cause for concern because the King’s Speech focuses on primary legislation, and primary legislation is not required to regulate BNPL. Instead, there is a much simpler and quicker process of secondary legislation. We have shared with the government a detailed paper outlining actions and timelines needed for swift and proportionate BNPL regulation.
Investment
The King's Speech includes measures which should help unlock institutional investment into our growth firms, and build on last year’s Mansion House compact. The Pensions Scheme Bill includes measures to support consolidation in the pensions market which should lead to more productive investment of funds, with bigger funds better able to invest in UK equities. The National Wealth Fund Bill puts the government's new £7.3bn fund on a statutory footing and seeks to provide a vehicle for institutional investment in growth through the British Business Bank (which has boosted investment in and through UK FinTech) and the UK Infrastructure Bank. The focus of this is on ‘industries of the future’ and we will want to ensure that FinTech remains in scope. This is also a priority we identified in our FinTech Plan for Government, and it is another area where it is good to see rapid commitment to progress.
Artificial Intelligence
Despite media reports there is no dedicated AI Bill, with the commitment being that “[The Government] will seek to establish the appropriate legislation to place requirements on those working to develop the most powerful AI models.” It is worth noting that the Digital Information and Smart Data Bill references “targeted reforms to some data laws that will maintain high standards of protection but where there is currently a lack of clarity impeding the safe development and deployment of some new technologies”, but does not mention AI specifically. We will be seeking further clarity on the government’s plans in this space.
Bank resolution
The Bank Resolution (Recapitalisation) Bill looks to take forward HM Treasury’s proposal as consulted earlier this year to expand the statutory functions and levy-raising powers of the Financial Services Compensation Scheme (FSCS) in order to enhance the resolution regime. This is intended to provide the Bank of England with a more flexible toolkit to respond to bank failures. In our response to the consultation, we expressed broad support for the proposals. However, we also sought clarity on how the cost of the proposed FSCS levies will be borne by industry, especially banks who already face increased costs in preparing to hold MREL (“minimum requirement for own funds and eligible liabilities”).
Wider relevant Bills for FinTech / business community
Employment Rights Bill
“The Bill will deliver on policies set out in the Plan to Make Work Pay that require primary legislation to implement including…making parental leave, sick pay, protection from unfair dismissal and flexible working available from day one on the job for all workers.”
Skills England Bill
“This legislation will establish Skills England to bring together businesses, providers, unions, Mayoral Combined Authorities and national government to ensure we have the highly trained workforce that England needs. Ministers will reform the Apprenticeship Levy into a Growth and Skills Levy to ensure that the mix of government funded training available to learners and employers aligns with skills needs.”
Draft Equality (Race and Disability) Bill
“The draft Bill will enshrine in law the full right to equal pay for ethnic minorities and disabled people and to introduce mandatory ethnicity and disability pay reporting…It will require mandatory ethnicity and disability pay reporting for larger employers (those with 250+ employees).”
Draft Audit Reform and Corporate Governance Bill
“The draft bill will replace the Financial Reporting Council with a new regulator – the Audit, Reporting and Governance Authority – with the powers it needs to tackle bad financial reporting and to build that trust…[and] extend Public Interest Entity (PIE) status to the largest private companies and thus making sure the audits of those important businesses are high quality and giving early warning of financial problems.”
What’s next for this legislation?
This afternoon will see the start of six days of debate on the contents of the King’s Speech, commencing with the Prime Minister’s speech to the Commons to set out the vision behind the legislative agenda. The sixth day of debate sees a vote on the King’s Speech. These 40 bills will now form the core of the government’s legislative programme for the next two years, however the government is not precluded from bringing forward legislation that is not included in today’s King’s Speech.
Exact detail on the finer details and passage of these bills will become clearer over the coming months. It is now down to the government to decide which bills will be tabled first for debate and division (voting) by the Commons. This is decided on a fortnightly basis by the Leader of the House of Commons, Lucy Powell MP. More information on the content of the proposed legislation may be revealed by Ministers throughout the six-day debate or published on government web pages over the coming days.
What’s next for this government?
Mansion House: We expect the Chancellor of the Exchequer, Rachel Reeves MP, to deliver her first Mansion House speech in the coming months, possibly in October.
European Political Community: Prime Minister Keir Starmer MP will host leaders from across Europe at the European Political Community meeting on 18 July.
G20 Finance Ministers and Central Bank Governors meeting: On 25 to 26 July, G20 finance ministers and central bank governors will be meeting in Rio de Janeiro, Brazil to discuss economic cooperation and other economic issues most pertinent to their countries and the world.
Webinar: Navigating the New Government
The first of our post-election member events will be a member-only webinar on Navigating the New Government. This is taking place on Thursday, 25 July at 1 - 2pm and we will be exploring:
- Who’s Who for FinTech in the government and Parliament;
- What the new government and Parliament means for FinTech: Policy priorities and initial in-tray, legislative plans;
- How government is approaching issues; and
- What next?: A look ahead.
All members are encouraged to register to attend here.
Innovate Finance Advocacy Next Steps
FinTech Plan for Government
ICYMI: Last week, Innovate Finance published our FinTech Plan for Government.
The Plan sets out actions for the first 100 days of the new government and over the course of the Parliament. It covers three priority areas that can grow the economy:
- Building the world's first Smart Data economy
- Make the UK the most secure and safe place in the world for consumers and businesses to use digital finance
- Make the UK the world leader in adopting new technology in financial services:
- Unlock investment at all stages of growth
- Build regulators for the digital age
- Equip everyone with essential digital and financial skills
Our Plan includes proposals on a number of priorities that need to be actioned from the pre-election 'in-tray': a National Payments Vision, proportionate regulation of BNPL and giving the regulators powers to introduce a stablecoin regime.
We have secured an early win here, as the government will be taking forward the first step towards building a Smart Data economy. As announced in the King’s Speech, the government will be introducing a Digital Information and Smart Data Bill.
Party conference season
This year, Innovate Finance will have a bigger profile than ever before at party conference, with our FinTech Drinks Reception at the Labour Party Conference in Liverpool. More information on this will be released in due course.
Engaging Ministers
Over the past two weeks, we have been reaching out to new Ministers, introducing them to our sector and the work of Innovate Finance and flagging upcoming opportunities to engage with members.
Introduction to FinTech with new MPs
We have identified new MPs who have experience working in or with FinTech and those with an interest in our sector, particularly FinTech's economic and social contributions to the UK. We are beginning work on organising opportunities for new MPs to meet with our policy team and members through various means over the coming months.
Got views? Get in touch
The team wants to hear from members, stakeholders, and wider networks across FinTech as we navigate this new government. If you have views or concerns, please feel free to email us with your thoughts at policy@innovatefinance.com.
