The public pronouncements on the financial sector by Liz Truss are likely to give fintech leaders cause for optimism.
Fintech leaders are waiting “expectantly” to see whether the new prime minister Liz Truss will be a friend or foe of the industry, but her public pronouncements to date on the finance industry sector give cause for optimism.
Truss was yesterday confirmed as the new prime minister after defeating Rishi Sunak in the Tory leadership contest.
The new prime minister has already given some indication of her views on the financial sector and there is likely to be broad optimism across the City, including fintech firms, about her appointment.
Truss, the former foreign secretary and trade secretary, has been vocal about tax cuts, including a reversal of a planned corporation tax hike, has spoken of breaking up financial regulators, scrapping further European Union rules to attract companies to London, and overhauling the Bank of England’s remit.
Truss on the City
In a recent interview with CityAM, Truss said she will “empower the City to drive economic growth” through tax cuts and regulatory reform and that she wants to maintain the Square Mile’s completive edge and “supercharge growth and investment”.
Truss added that the City is a “jewel in the crown of the UK economy but for too long its potential has been held back by onerous EU regulation, which have stifled growth and stunted investment".
Truss’s comments, which are likely to be welcomed by the fintech community, mark a contrast to her predecessor Boris Johnson, who some believe short-changed the capital.
Janine Hirt, CEO, Innovate Finance, the fintech trade body, said: “We welcome Liz Truss’ emphasis on economic growth, the competitiveness of UK regulation, and tackling the immediate challenge of rising costs for businesses and households. These are all crucial issues for fintech.”
Truss on taxes
During the leadership context, tax proved a big dividing line between Truss and Sunak, the latter pledging to support the economy through Covid with measures which were likely at odds with many traditional Conservatives.
Sunak also raised national insurance contributions and planned a hike in corporation tax.
Truss has pledged to reverse the rise in national insurance and scrap the increase in corporation tax from 19 per cent to 25 per cent from next April, a likely welcome boon for the fintech industry.
“London is a leading global financial centre, but for it to remain one, we must maintain its competitive edge,” Truss has said.
“Raising corporation tax to the same level as France isn’t going to attract new businesses that will supercharge growth and investment.”
Truss on IPOs
Those fintechs looking to go public might take solace from the appointment of Truss, who appears to be a proponent of encouraging more tech firms to list in the UK.
Truss’s campaign team are said to want to revive talks with Softbank Group to encourage its UK chip designer Arm to list its shares in London and New York, according to Bloomberg.
While such a decision is out of the government's hands, Truss sees dual listings as an attractive prospect for the UK.
Hirt added: “We would also encourage continued action to develop the UK listing environment, including digitisation of shareholding and unlocking further investment in UK startups and scaleups.”
Truss on regulators
During the campaign, Truss and her allies floated the idea about the government having more oversight over the Financial Conduct Authority and the Prudential Regulation Authority, and have even talked about merging the two entities, as well as overhauling parts of the Bank of England’s remit amid its struggles to control inflation.
But he added that there was an urgency to implement key findings from the Kalifa review, if Truss wanted to be a true champion of the fintech sector.
Shaw added: “In particular, the review identified skills and talent as a key are in need of investment to maintain the growth of UK fintech. If Truss takes steps to ensure the sector is equipped with the talent it needs – both by expanding visa programmes to attract more foreign workers and also investing in home grown digital education to improve the domestic talent pipeline – then she will make many more friends in fintech than foes.”
Hirt said: "On the regulatory front, there is an opportunity to strengthen the current Financial Services and Markets Bill to advance the competitiveness of UK FinTech and financial services."
Truss on cost of living
During Covid, Truss’s rival Sunak had a reputation as a chancellor who helped fintech, which became significant lenders under the government-backed lending schemes to help troubled businesses.
One fintech Chip said it was hoping Truss would build on Sunak’s work to help on the cost of living crisis.
Alex Latham, CMO and co-founder of Chip: "Rishi Sunak had a proven track record of supporting fintech companies and innovation in this field, so it will be interesting to see how Liz Truss can build on that.
“During the cost of living crisis, fintech innovation can provide crucial tools and support for people with their finances. Helping our users to manage and grow their money is our absolute focus, regardless of who is at the helm of the government."
Truss on crypto
While it is understood Truss has not commented at length about crypto, the industry is optimistic about her appointment and wants to work with the government on regulating the industry.
Thomas Tudehope, Luno’s global head of public policy, said: "Luno believes there is an urgent need to develop and implement a regulatory framework that protects consumers, ensures all crypto companies operate at the highest standards, and enables British firms to plan with the certainty that is required if we are to position the country as a world-leader in the digital asset ecosystem.”