Fintech leaders pass judgment on new Prime Minister Liz Truss

The public statements on the financial sector from Truss are likely to give fintech leaders cause for optimism.

Image source: Courtesy of Arek Socha/ Pixabay

Fintech leaders are waiting “in anticipation” to see whether new Prime Minister Liz Truss will be friend or foe to the industry, but her public statements to date about the financial services industry 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 widespread 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 rise in corporation tax, has talked about breaking up financial regulators, scrapping further EU rules to attract companies to London, and overhauling the Bank of England’s mandate.

Trusses in the city

In a recent interview with CityAMTruss said she wants to “empower the city to drive economic growth” through tax cuts and regulatory reforms, and that she wants to maintain the Square Mile’s comprehensive advantage 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 burdensome EU regulation, which has stifled growth and hampered 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 shortchanged the capital.

Janine Hirt, chief executive, 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.”

Trust taxes

In leadership terms, tax showed a big dividing line between Truss and Sunak, the latter promising to support the economy through Covid with measures that were likely to be at odds with many traditional conservatives.

Sunak also raised social security contributions and planned an increase in corporation tax.

Truss has promised to reverse the increase 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 so we need to maintain our competitive edge,” Truss has said.

“Raising corporate tax to the level of France will not attract new businesses that will increase growth and investment.”

Trust in IPOs

Speculation continues to swirl about whether several major fintechs, such as Monzo and Revolut, will follow the likes of Wise and IPO on the London Stock Exchange.

Those fintechs looking to go public may take comfort from the appointment of Truss, who appears to be an advocate for encouraging more tech firms to list in the UK.

Truss’s campaign team is said to want to revive talks with Softbank Group to encourage British chip designer Arm to list its shares in London and New York, according to t.o Bloomberg.

While such a decision is out of the government’s hands, Truss sees dual listings as an attractive prospect for Britain.

Hirt added: “We will also encourage continued action to develop the UK IPO environment, including digitizing share ownership and unlocking further investment in UK startups and scaleups.”

Trusses on regulators

During the campaign, Truss and her allies floated the idea that the government should have more oversight of 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 mandate. its struggle to control inflation.

Russ Shaw, founder of Tech London Advocates, said fintech leaders would “welcome” Truss’ decision to merge key financial regulators.

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 need for investment to sustain the growth of UK fintech. If Truss takes steps to ensure the sector is equipped with the talent it needs – both by expanding visa programs to attract more foreign workers and also invest in home-grown digital education to improve the domestic talent pipeline – she will have many more friends in fintech than enemies.”

Hirt said: “On the regulatory front, there is an opportunity to strengthen the current Financial Services and Markets Act to promote the competitiveness of UK fintech and financial services.”

Truss on the cost of living

During Covid, Truss’s rival Sunak had a reputation as a chancellor who helped fintechs, which became significant lenders under the state-backed lending schemes to help troubled businesses.

One fintech chip said it hoped Truss would build on Sunak’s work to help with 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 space, 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 to people with their finances. Helping our users manage and grow their money is our absolute focus, regardless of who is at the helm of government.”

Truss on crypto

Although Truss is understood not to have commented much on crypto, the industry is optimistic about her appointment and wants to work with the government to regulate 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 that all crypto companies operate to the highest standards and enables UK firms to plan with certainty. it is necessary if we are to position the country as a world leader in the digital asset ecosystem.”