The Conservative manifesto had little meat in it for financial services firms looking to Theresa May to assuage their fears around Brexit. This is a document clearly designed to meet the wants and desires of British citizens, not British businesses. Of the two new FS specific policies in the manifesto, one is a non-binding pledge to expand rural communities access to business banking and other financial services through post offices, and the other is an attempt to create a sovereign wealth fund, branded as a ‘Future Britain fund’, from the proceeds of shale gas extraction and the sale of other dormant assets.
As a result Britain’s financial services industry, one of the biggest contributors to the UK treasury and a collection of companies highly exposed to the risks Brexit presents, must read between the lines to discover their fate.
On Brexit, the policy is relatively clear. Britain is heading for a totally new relationship with the European Union, one that for the first time is confirmed to be outside the customs union. The Conservative manifesto explicitly commits May and the Conservatives to the idea that no deal is better than a bad deal, but repeated mentions of the phrase ‘smooth and stable’ indicate there is a widespread desire for a transitional arrangement, and an appreciation of the necessity.
On national financial services policy, May’s direction is less clear. Her manifesto and views explicitly change the ideological direction of the Conservative party, to one that believes in the idea of government interventionism and not in the power of an unbridled free market. The manifesto does commit to domestic policies such as the successful expansion of auto-enrolled pensions, and that the party will continue to extend auto-enrolment to small employers and the self-employed. They also play lip service to the promotion of long-term savings and pensions products, including the Lifetime ISA, and the ability to allow saving for long-term needs, including a house purchase and retirement.
The FCA have confirmed that planned EU regulations – MiFID II and PSD II – will be adopted into UK law. However, whether May is happy leaving the EU to continue to form UK financial services policy is yet to be seen.