Dear members 

Yesterday evening the Chancellor of the Exchequer, Rachel Reeves, gave her third, and most likely final, Mansion House Speech. The speech covered pre-trailed announcements around digital markets, AI in financial services and tokenisation as well as the publication of the Transatlantic Partnership Taskforce work on markets of the future and an update delivery against the financial services growth and competitiveness strategy over its first year.  

Of most relevance for our sector, the Chancellor highlighted insurers progress in delivering £17billion investment against the £100billion investment commitment following Solvency UK reform. This positive reference to progress on investment from the sector follows significant engagement with HM Treasury by the ABI and members. We have responded to the Chancellors speech on our website and will be working to provide a further public update on Solvency UK investment progress in the autumn. The Chancellor also used her speech to reference £10billion investment in private markets as a result of changes that she has made.  

This was a more political and wide ranging Speech than you would usually get at Mansion House. The  Chancellor spoke about her hope and ambition for the UK economy, arguing that the twin approach of being radical and securing economic stability has ‘begun the work of change’ and ‘set a foundation for the new Prime Minister to build on’. She also highlighted the EU relationship reset and her hope that the EU-UK Summit is reorganised for the autumn.  

As part of the wider package of measures alongside the Speech, earlier yesterday the Bank of England and FCA published their latest update and proposals for the adoption of UK captives regime.  We have consistently supported the introduction of a new captives regime for the UK and will continue to work alongside the London Market Group on the latest proposals and further consultation.  

Ahead of the speech, the Treasury published a series of announcements, including the Growth and Competitiveness Strategy One Year Update and the AI Adoption Plan. The full list of publications are linked with a short summary of key updates included below.

We are pleased to see the publication of the Financial Services Skills Compact, which we have supported and will be working closely with members and the Financial Services Skills Commission to support delivery.  

As expected, the Chancellor provided an update on the progress of the Financial Services Growth and Competitiveness Strategy. We provided a submission with member feedback on the strategy to HM Treasury in April. Our feedback set out members support for the strategy and pushing for delivery to reduce the regulatory burden for firms, alongside greater consideration of a more competitive tax regime to support growth.   

The update includes some helpful commentary, largely consistent with previous government messaging on reducing the regulatory burden. There is helpful recognition that industry have said the direction of travel is good, but that the government now need to deliver. One of the big delivery pieces they are focussing on is the Financial Services and Markets Bill, which has now completed its Committee Stage in the House of Lords and we are continuing to engage with parliamentarians and HM Treasury ahead of Report Stage in September. A priority of our ongoing engagement has been to secure the proposed reforms to the Financial Ombudsman Service, which is getting a lot of attention from consumer groups and backbench Peer amendments.  

Obviously we are supportive of the Bill and direction of travel, however the update uses the impact assessment numbers to highlight progress “The government has introduced a Financial Services and Markets (FSM) Bill to Parliament that is estimated to deliver a net positive impact to society of £1.6 billion over the next decade, including £1bn in administrative savings to firms.”  

They also go on to claim that both the FCA and PRA have each reduced reporting requirements to firms by £100m per year. . In both cases, our discussions with members indicate that these numbers are likely to be over-inflated. We will be making this point in our engagement with HMT, and our planned Regulatory Impact Report aims to set out our evidence base for this in more detail. 

We are supportive of the progress of the Growth and Competitiveness Strategy but will continue to make clear where we think further progress Is needed and the importance of delivery. We expect the Mansion House Speech to now include annual updates on progress against the Strategy, as part of the wider Industrial Strategy.  

The publication of the Adoption Plan follows the Mills Review last week and the work of the government’s Financial Services AI Champions. The Plan sets out strong support from government for a tech-neutral, outcomes focussed approach, but with a need to: 

• Focus on scaling reach of regulatory initiatives like sandboxes and establishing a “clear, authoritative single source of cross-regulator guidance”.  
• Review of regulatory perimeter by the FCA “to introduce proportionate guardrails for AI-enabled services” and ensure there is level playing field between regulated entities and unregulated ones.  

This position reflects priority feedback members have given to both the AI Champions and the FCA, so this appears to be a positive step. 

The other headlines are: 

• AI Sovereignty and resilience – focus on this. Discussion also of bringing LLMs into the Critical Third Party designation  
• Skills and Talent: a new strategy to build the skills base for AI use in financial services  
• Agentic Payment Readiness – thinking about this specific use case in the near term before going on to look at other agentic use cases.  

We will be working through the more detailed recommendations and will be engaging with members on these in due course.  

AI was also a theme of the speech from the Governor of the Bank of England yesterday evening, with Mr Bailey urging caution about the short term productivity gains we will see from use of AI and stating that “we are between two major cycles of technological innovation showing up in the productivity and growth statistics,” and that the global economy is currently seeing diminished growth from the internet without replacing it with any significant gains from AI so far.” The Governor also spoke about the allocation of resources to AI and the need for sustainable clean power supply to meet demand for AI and data centres.