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Why we can ‘cheers’ to Labour’s fintech policies

Labour fintech policy
Image credit: Martin Suker / Shutterstock.com

In Australian politics, policies are often judged under the metric of the ‘pub test’: would an ordinary patron understand and accept to be fair any given policy, decision or proposal?

Weighing up the merits of Labour’s plans for financial services down at the pub may not be the best conversational gambit for Friday drinks with your mates. However, many of us in the industry will be wondering whether to raise a glass to the Labour Party’s vision for fintech and financial services – a sector that barely existed when they last held power.

The pub test might be limited to a few overpriced boozers in Shoreditch and the City, but the challenge remains relevant: Labour’s plans must be clear and convincing.

So, how likely are they to pass the test?

The announcement itself was broadly themed across three focus areas: ensuring the UK remains the best place in the world to start and scale a fintech, reinforcing consumer protections and embracing innovation.

Last year, Startup Coalition supported a number of roundtables as part of Labour’s ‘Start Up, Scale Up’ review. This report picks up where that work left off including broadening the British Business Bank remit, establishing a British ‘Tibi’ and consolidating pension funds. Increasing funding for UK startups can only be a good thing for UK fintechs.

Labour is also looking to scale regional financial centres, aiming for fintech to grow outside the Square Mile, while measures such as the changes to ISAs to allow retail investment into capital markets offer the opportunity for more British savers to feel they have a stake in the success of the sector.

First round in, and we’d suggest these changes look like a great start, particularly as they will build on the foundations of the Mansion House reforms.

On to round two. Do the announced measures succeed in promoting consumer protection? Buy now, pay later (BNPL) has been consistently in the headlines, aided by tireless campaigning from backbench Labour MPs like Stella Creasy.

Regulation is well overdue and we know the Labour team have made great strides in engaging with industry to iron out the tricky details that have stalled regulation until now. To be frank, if it were simple, it would have been done by now, but aspiring to break through the noise and get on with it is certainly positive.

More generally, Labour also intends to introduce safety standards for the use of AI in financial services, and also launch a dedicated focus on innovative ways to reach underserved communities with fintech. I think all punters could agree these are good ideas.

Finally, Labour will embrace innovation. This starts with the long-trailed ‘Regulatory Innovation Office’ which would certainly be welcome in promoting cross-regulator collaboration, but with political impetus. The experience of open banking demonstrates the paralysis that can seep into initiatives without political direction.

The biggest toast of the day may well go to the specific commitment to entrenching open banking, and cracking on with open finance. The new Data Bill makes this possible, and a £4bn open banking sector stands ready to bring it to life.

Labour’s plan for financial services has shown that they get it. The announcements are understandable, sensible and largely agreeable. We can ‘cheers’ to that.

But they now face a much harder task. The devil is in the detail, and as we approach closing time on the current government, fintechs in the UK will judge an incoming Labour administration on its deeds, not words.

Luke Kosky is fintech policy lead at the Startup Coalition