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The UK’s recent election and change in government has already signalled developments for the financial services sector across areas including whistleblowing and the National Wealth Fund. With a likely increase in regulatory scrutiny over the horizon, it’s worth ensuring your policies and procedures are airtight.
The Labour Party introduced the FCA’s predecessor, the FSA, and there haven’t been any pre-election statements about alterations to the current regulatory regime. This means we’re not expecting any significant reforms. However, Labour has been vocal in its support of improving rewards for whistleblowing, including potential financial incentives to those who identify sanctions breaches. This aligns with the FCA’s business plan, where the reduction and prevention of financial crime is a key commitment.
Whistleblowing policy proposal
If Labour’s pre-election whistleblowing policy proposal is introduced, then the FCA is more than likely to have an increase in whistleblowing reports to review, leading to an increased scrutiny of firms for potential control failures. The regulator has recently released their Q1 2024 whistleblowing data showing how it acts either through writing to or visiting a firm. It also shows how, more significantly, the FCA can act through enforcement action including commissioning a skilled person (S166) report or restricting a firm’s permissions or individual’s approval.
Having a third-party review and assess your controls can help alleviate these pressures by identifying any potential weaknesses. Given the proposal from Labour seems a relatively simple change that could prove effective for the regulator, you should consider the potential impact of increased regulatory scrutiny and what support you might require now and in the future.
National Wealth Fund
Labour has started on its establishment of a National Wealth Fund which was part of its pre-election manifesto to kickstart economic growth. The National Wealth Fund will be targeting £3 of private investment for every £1 the new public fund invests. With a budget of £7.3bn over the next five years, this means they are targeting over £21bn of private investment to support their plans. This includes building gigafactories for the automotive industry, accelerating carbon capture, and supporting the manufacturing of green hydrogen.
The infrastructure projects will present direct investment opportunities as the Labour party targets the private funding to support its plans. It will also present indirect opportunities in the form of increased jobs, meaning surrounding areas where these projects are located may require new homes and local amenities to be created. As these infrastructure projects develop, business opportunities may arise. New homes and business will also benefit from the support of private investment.
Investment opportunities
The new Chancellor of the Exchequer has already made it clear that Labour “need to unlock private-sector investment”. This means there will be opportunities for private investors to invest in assets supported by the National Wealth Fund. In the future this should present investments in new industries as well as ‘green’ industries.
Whilst the newly appointed government and Chancellor continue to establish the new fund, firms and investors should be alert to new opportunities when they arise. This could be the creation of a new fund or raising capital for individual investment opportunities.
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