***?CHECK AGAINST DELIVERY??***

Speaking this evening at UK Finance's Annual Dinner in London, Stephen Jones, Chief Executive of UK Finance said:

?Ladies and gentlemen, let me reiterate Bob's welcome and thank you for your support of UK Finance 18 months into our existence. We continue to develop our strategy of supporting the UK as one of the world's great, global, financial centres; ensuring that we are the safest and most transparent place to conduct financial services business; and always seeking to act in the interests of the customers we serve and the society that relies on us.

Particular thanks go to our sponsor and partner tonight, and across a number of other activities this year, EY.

And thank you to our guest of honour, the Rt Hon David Lidington CBE MP, the Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster, for joining us this evening. And unlike the PM in Brussels tonight, David is invited for dinner.

Bob has addressed some of the things we have been able to achieve and the relationships we have sought to forge, not just across our industry and its regulators, but also with elected officials at home and abroad, as well as with representatives of the clients of our industry and of the third sector.

We have sought to establish a new type of trade association - not too noisy (in public at least!), hard-working, evidence-based, expert, listening, connected, one which represents and is responsive to the needs of the wide range of organisations which make up our membership and at the same time is acutely sensitive to the role that our members play in the wider economy and society at large.

And I would like to take this opportunity to reflect on some of the challenges ahead in the current political, economic and social context in which all the businesses we represent operate.

But before I do so I want to pay tribute to my team, your team, for their hard work, resilience and the excellence of their output over the last year. Bob has already covered our output this month alone in referencing the creation of the Financial Sector Cyber Collaboration Centre; the public/private work underway to reform the SARs regime; the consultation on a draft code to reduce and reimburse APP fraud  and the adoption of detailed financial abuse guidelines.  In addition:

We have responded to the authorities? discussion paper on the most significant business and regulatory challenge of the future, namely operational resilience;

We are preparing for the publication of Simon Walker's independent review of the SME banking landscape, and in particular how disputes between banks and their SME customers can more quickly, effectively and fairly be resolved; and

And yesterday we gave evidence to the French Senate who are testing the assertion by Brussels that there are no significant cliff-edge issues which will require public intervention in the event of a no deal Brexit, an assertion which of course we reject strongly.

I could go on - but the point is that the pace of activity, of change, of transformation is unrelenting and UK Finance is in many cases policy advocate, convener, thought leader and just occasionally the public whipping horse at a time of great change for our country and our industry.

So thank you to my team, your team, for delivering consistently, at a pace, to a high standard, and with the resilience (perhaps that should be for having the hide of an elephant) that is required in marshalling multiple points of view and interest from all parties responsible for and impacted by the critical industry in which we are all engaged.

Oh, and let's not forget they have done so while adapting to a 6 -way merger, new operating systems, significant staff turnover - and me!

And so I would like to reflect for a few moments on the backdrop against which UK Finance currently undertakes our activity.

• The party conference season has concluded and Westminster appears to be paralysed by a few ideologues at a time when the country desperately needs statesmen and women;
• We are nearing the Brexit end game (or perhaps one of many deferred end games), whilst business plans for a no deal cliff-edge;
• We are experiencing increasing challenges to the post war liberal orthodoxy not just in the context of Brexit;
• Public finances are by some measure improving but the price of austerity, stagnating living standards and hard-pressed public services, are borne disproportionately by the most vulnerable in society; and
• Much of the blame for this situation and outlook is attributed by most outside our industry to the action or inaction of those in this room or our predecessors.

There is a fundamental crisis of confidence in Jack Welch capitalism. The capitalism that delivered growth and progress and brought billions of people out of poverty is not seen to be delivering for society as a whole now.

Let me see if you can guess who made the following statements:

Statement 1:

?There are millions of businesses out there which deserve our respect and we will always support them. They are responsible, ethical entrepreneurs, who pay their taxes and support our community. They should know that we are proud of them.?  [John McDonnell]

Statement 2:

?Economic power has been concentrated in the hands of a few and crony capitalists have rigged the system in their favour and against the rest of us. Over recent decades, debt has fuelled growth in an unsustainable fashion? [Michael Gove]

Statement 3:

?People with assets have got rich. People without them have suffered. People with mortgages have found their debts cheaper. People with savings have found themselves poorer.?  [Theresa May]

Statement 4:

?Brexit did not happen in a vacuum. It is a product of something deeper and wider. It happened because over 20 years or so, as the world has got smaller, a gap has opened up in Britain and in other developed countries between the theory of how a market economy delivers and distributes rising prosperity and the reality experienced by ordinary people.?  [Philip Hammond]

Clearly, there are many perhaps surprisingly consistent cues from across the political spectrum for us to pay heed to.

There is no question that since the crisis, accommodative monetary policies designed to stimulate productivity and growth have not succeeded in doing so at a pace which has enabled all boats to rise from the sea bed as the tide has slowly come in.

So what is it about Jack Welch capitalism that is in question and how should we, one of the most important industries in our economy and our society, respond? How should we adapt it without losing the fundamentally positive forces of a market-based economy that deliver prosperity and reduces poverty?

Both sides of the political divide are agreed that growth and productivity have stalled because financial and human capital has not been allocated to productive investment.

Many providers of capital, often institutional investors managing the pensions of those with savings, have continued to reward dividends and share buybacks, and quarterly metrics of financial performance, over other more sustainable long-term approaches and measures.

Regulation across our sector, whilst necessary, has not always been joined-up, proportionate or pro-competition.

Without a longer term approach to return and regulation, innovation, creativity, competition and judicious risk taking have been stifled as we have struggled to rebuild financial stability.

We have exhausted leverage as a force to propel growth, and we have exploited our natural resources as if they were infinite.

So how do we address these challenges? Our social and economic purpose as an industry is clear. Helping a small business to grow; helping a family to buy its own home; powering seamless, instant payments that have made e-commerce possible; providing trade finance and risk management for an exporter entering new markets; driving efficient, transparent and secure financial markets; and providing support when the unexpected happens, when vulnerability strikes (as it will to everybody in this room and in society at some point). And within our institutions powering diversity, inclusion, opportunity, participation and security.

At UK Finance, we have been working with a number of member firms to share best practice in how institutions implement and explain their long-term purpose and strategy.

We have been doing so with the support of some long-term institutional investors, capital providers who too want to understand better the long-term purpose and sustainability of the companies in whose capital they choose to invest. Capitalism with a long term focus will attract long term capital and deliver prosperity that is enduring.

So in thinking about the new issues which are truly strategic and will determine the sustainability of a financial institution, we have focused on the following:

First: Culture and Conduct. In the initial aftermath of the financial crisis, priority was given to restoring balance sheets and strengthening the capital and liquidity standards to which banks are held. But the root cause of the crisis had as much to do with culture and governance standards: since then, significant emphasis has been placed on improving the way in which we conduct business. So we have seen the introduction of the Senior Managers and Certification Regime, the re-writing of the Banking Conduct rules and aligning remuneration to the long-term way we want people to behave. We must maintain our focus and pace to ensure the best long-term interests of customers are at the heart of our every action.

Second: Colleagues. We have also challenged ourselves to broaden not only the skills, but also the experiences, backgrounds and perspectives that we can draw upon from colleagues at all levels across our industry. Initiatives intended to create the type of open and inclusive workplace that should be a defining factor of a modern business in 21st Century Britain should be led by this industry. Looking around this room, there is more for all of us to do. For all of us this is critical. Diverse talent has the potential to do more than anything to help us reconnect with those we aspire to serve.

Third: Community and Customers. Many of the nativist political movements I described earlier are driven by a desire to reassert a sense of identity and belonging, a desire to feel a physical sense of community even if the marketplace in which customers engage with financial services (and purchase their goods) becomes increasingly digital. We must of course strive to keep customer data secure - as an industry finance IS trusted as a custodian of cash and data and we abuse this trust at our peril. But as we adapt business models, close branches, promote digital payment channels and see the use of cash decline, we also have a responsibility to the communities we serve. In particular we must acknowledge those uncomfortable with digital service provision, and demonstrate our commitment to them and the place to which they belong. An under-used bank branch cannot be sustained indefinitely. But as an industry we need to reinforce our commitment to communities through initiatives like the promotion of Post Office arrangements through which 23 financial institutions make available 11,500 post offices to personal and business customers wanting physical access to everyday banking services.

Fourth: Capability. Many of you in this room make exceptional efforts in school financial education for pupils up and down the country. But millions of families operate with chaotic finances, oscillating between the mainstream and unregulated financial sectors to pay bills and support indebtedness. It is left largely to charities like MAT, StepChange and Citizens Advice to support those who are struggling. The Government's Financial Inclusion Policy Forum, led by 3 ministers including the Economic Secretary, John Glen, who is with us here, and with the support of a number of other individuals in this room tonight, is leading vital work with real commitment to all households in managing their finances. Let's redouble our efforts as an industry to play a core, collaborative role in improving financial capability.

Fifth: Climate. We are exhausting the natural resources of our planet at an unsustainable rate. Fast forward three years from Governor Carney's Tragedy of the Horizon speech,  and we have seen this month the publication of a PRA consultation paper  and FCA discussion paper  setting out supervisory expectations in respect of climate-related financial risks. Both have placed adherence to the FSB-sponsored Taskforce on Climate-related Financial Disclosure at the centre of their proposed approaches. An impressive array of banks, asset managers, pension funds, insurers and others - many of whom are in this room tonight - have already signed up to bringing climate considerations more firmly within their core governance and risk management processes. We must all do so for the sake of future generations. We have no choice and those in this room can be powerful enablers of necessary change in other sectors of the economy as well.

Sixth: Cyber. I have already referenced the operational resilience and cyber work we are undertaking. The UK has the opportunity to be world leading, ensuring that we are the safest place in and from which to conduct financial services business. And cyber is like NATO - an attack on one is an attack on all. Let's redouble our efforts to collaborate, not compete, in this critical area and support the development of the Financial Sector Cyber Collaboration Centre which Bob talked about earlier.

Culture & Conduct. Colleagues. Customers & Community. Capability. Climate. Cyber. The way in which we approach these issues has as much - if not more - bearing on franchise health as short-term financial performance. We have a duty to engage with our stakeholders in the widest sense - not just the providers of capital - in promoting the long-term interests of the companies or building societies we lead or regulate.

Long-term value has financial and risk discipline at its heart. The damage to the economy, to society, caused by a bank failing financially because it lends irresponsibly is huge.

But we cannot think about our role and purpose in narrow financial terms alone. We must embrace, measure and disclose our broader long-term attributes and performance - culture, conduct, colleagues, customers, community, capability, climate, cyber.

Transparency of our respective behaviours and performance - and the unleashing of good, healthy, competitive spirit to do better than each other in these areas - will surely help us to rebuild customer and societal engagement in the positive role of finance and our institutions and restore trust not only in banking but in capitalism itself.

Thank you again for joining us tonight, thank you to the Rt Hon David Lidington for addressing us and thank you to EY for once again sponsoring this event.?