UK Finance Chairman Bob Wigley’s Annual Dinner speech

‘***‘CHECK AGAINST DELIVERY ’***'

Speaking this evening at UK Finance’s Annual Dinner in London, Bob Wigley, Chairman of UK Finance said:

My Lords, Ladies and gentlemen, good evening, my name is Bob Wigley and I’m the Chair of UK Finance. 

I would like to begin by thanking our sponsor, EY, for once again supporting us this evening. 

It’s a privilege to welcome you to our Annual Dinner – the third since we were established in 2017, tonight in this magnificent and historic Guildhall. 

And as I consider the progress made in the intervening centuries I would like to reflect on when this hall was built. 

Construction of this hall was completed in 1440 and as the all the historians in the room will know, this was a most significant decade - Kings College Cambridge was founded, the first English patent was granted (over the production of coloured glass), Morris Dancing was named and England was at war with France and Scotland… 

...in the case of the last two points, perhaps not that much has progressed after all…. 

Given the political environment, we do not, and we should never, take the UK’s leading position as a global financial centre and as a centre of innovation for granted for one second. 

The business environment is currently challenging, with economic growth slowing at home and abroad. 

Many firms in our sector, large and small, wholesale and retail, are faced with a return on equity that falls short of their cost of capital at time when the credit cycle is at its most benign. 

And overseas citizens, financial services industry employees and businesses are wondering whether “should I stay or should I go” and how welcoming we will be as a nation in the future. 

The country is undergoing rapid change – political, technological, demographic, environmental – and our sector must ensure it adapts to serve the economy of the future. 

 That is why we have been working hard with all of you to create a vision for a post-Brexit UK financial services sector which we have shared with the government, opposition parties and regulators. 

It addresses four critical points – taxation, regulation, economic crime and a proportionate approach to regulation ensuring we have a regime that enables our mid-tier banks to grow and compete. 

The UK needs to address some of the structural disadvantages to locating businesses here that we have allowed to develop over recent years. 

As a truly global industry, financial services are particularly susceptible to discrepancies between tax regimes in different jurisdictions. 

As the UK looks ahead to a future outside the EU, and pivots to a different kind of engagement with the rest of the world, we need to have a taxation system that makes us internationally competitive. 

UK Finance’s recent international tax benchmarking found that the typical corporate or investment bank based in London faces a total tax rate of 50 per cent, compared to the 34 per cent for a similar bank based in New York, 23 per cent in Singapore or even 44 per cent in Frankfurt. 

Absent action to address this fundamentally uncompetitive position, even more banking business will leave the country than Brexit alone would have caused, and less new business will come. 

So, we have called on government to phase out the bank levy that makes us internationally uncompetitive so this country remains an attractive centre for investment. 

We have also been very clear with government about the need to reshape the regulatory framework to make it fit for purpose post-Brexit – with better coordination, cost benefit analysis and prioritisation between regulators – air traffic control as we call it - striking the right balance between keeping the system and individual citizens safe, enhancing the UK’s competitiveness and allowing innovation and enterprise to flourish. 

The current HMT consultation close on 18th October and would encourage all interested parties to respond. 

We also welcome the Treasury’s recent announcement of a comprehensive review of the UK’s financial services regulatory framework. 12 years after the crisis, and in anticipation of Brexit, as an opportunity to calibrate that we are in the right place. 

And to our friends in Europe, let me assure you that the industry we represent, aspires to strong, internationally coordinated regulation. 

A core part of the right regulatory framework is a focus on proportional regulation. 

 We have made the case strongly for a more proportionate banking regulatory regime for the mid and smaller tier of banks – which if implemented could very substantially move the competitive needle and create some larger competitors quickly. 

On the final subject, economic crime. Fraud IS the UK’s largest crime and its frequency and cost is growing exponentially. 

Our law enforcement agencies are not resourced to deal with it effectively. 

And we at UK Finance are committed to working in partnership with the public sector and law enforcement to address this growing threat. 

Throughout this year we have been working with the Chancellor and Home Secretary as the representatives of the private sector on the UK’s economic crime strategy board to create an agreed public-private threat assessment and from it a prioritised economic crime plan to address the most severe threats through a series of public private partnerships including SAR’s reform, fraud and counter terrorism initiatives. 

As part of our vision of creating a UK that is the safest and most transparent place to conduct financial services business in the world, we will continue our work in partnership with government to radically improve the effectiveness of the system and so reduce the cost to the public and our members. 

You can rely on Stephen and I and indeed the whole team to continue to press these key points and any others we agree with you as the political scene unfolds over the coming months but I can assure you your trade association has never been more closely engaged with key officials and Ministers. 

Brexit day – 31 October – is now little more than a month away. And while it would be possible to stand here and speak of nothing else, I will keep my remarks on this brief. 

Our priority is to ensure the banking and finance industry can continue to meet the needs of its customers. 

We of course agree with the government that exiting the EU with a deal is the best option to minimise disruption for businesses and consumers on both sides of the Channel. 

But with the risk of no agreement a reality, we have been focusing hard on mitigating the impact of any ‘no-deal’ exit. 

The sector is as prepared as it can be and we at UK Finance continue to work with the government to help raise awareness and readiness amongst businesses and consumers. 

But no matter the course of events in the next few weeks, I, for one, remain optimistic about our future. As a country, we have many natural advantages that will be unaffected by any Brexit outcome. 

Our time zone and language, our heritage, our world-revered judicial and legal system, competitive employment laws, – to name but a few. 

But also, importantly, our amazing capacity for innovation and creativity – the talent and skills which sets us apart. 

As I tour the country, I am clear that innovation has never been stronger in the UK in my lifetime. 

Thank you once again for joining us this evening, and for your ongoing support as we strive to continue serving you and delivering on our shared objectives. 

Please now join me in welcoming the Economic Secretary, John Glen to give the keynote speech.