Miles Celic, CEO of TheCityUK delivers his opening address at the annual Guernsey Funds Forum in London.
Transcript:
Good afternoon, and thank you, Rupert, for that very generous introduction. It is a pleasure to be back at the Guernsey Funds Forum which I’m sure will generate another great series of thought-provoking discussions.
It’s also great to be back with so many friends and colleagues from Guernsey, only shortly after my visit to the island earlier this year
Today, I want to explore a few core themes: the industry’s role in driving growth; the value of boosting UK competitiveness; and how we better adapt to an evolving regulatory environment.
In a general election year, where the battleground for the major parties is on economic stability, resilience and growth, collectively, our industry could not have a more important part to play.
Let’s first take our role in driving growth.
The UK-based financial and related professional services industry is truly a national asset. Two thirds of its more than 2.4 million jobs are based outside London, and regional financial services exports make up nearly half of the national total. The relationship between London and the regions and the nations is symbiotic; and the expertise that sit in financial hubs across the country strengthens the UK’s overall attractiveness as a world-leading centre of finance.
Not only is it an engine for growth which drives innovation and productivity across the economy, it also strengthens UK soft power and influence abroad.
And Guernsey – an integral part of the British family of crown dependencies and overseas territories – is an added string in the bow of the UK’s financial services offer. While small in geography, I don’t need to tell people in this room that Guernsey punches well above its weight in influence and in terms of its contribution to the wider ecosystem, both within the UK and globally.
As a vibrant financial hub in its own right, annually, Guernsey delivers £7bn of investment returns for UK investors, and UK-based fund managers generate £2 billion of fees from Guernsey-based funds. And with these funds increasing their investment into UK assets by 14% per year since 2020, they’re also bucking wider trends for Foreign Direct Investment. More broadly, the £57bn that the island channels into the UK, through private equity, real-estate, infrastructure and renewables is significant.
It is clear that Guernsey’s contribution to driving growth across the economy cannot be understated. The island’s investment also helps to bolster UK competitiveness, fostering innovation, particularly in areas like green and sustainable finance and FinTech.
I always like to point out that the island was the first to launch a green fund kitemark, the Guernsey Green Fund, setting an international benchmark on environmentally sustainable investment. Guernsey's Natural Capital Fund regime is also pioneering the effort to boost investment in biodiversity.
These sectors embody the future of finance, aligning investment with global sustainability goals while offering competitive returns. And they are a further example of areas where the wider British ecosystem can learn from Guernsey – in particular in green and sustainable finance, which is a key competitive advantage for the UK. Similarly, Guernsey’s proficiency in carving out its place as a high-quality and agile service provider – one of those elements that improves the ‘whole’ British family offer – is a model that we would do well to apply to our broader thinking on the UK’s post-Brexit regulatory framework.
This is especially important because a proportionate, agile and stable regulatory environment is essential to enhancing the UK’s overall competitiveness and driving growth across the economy – and there have been some positive steps taken over the past couple of years. This has included the Financial Services & Markets Act 2023, which introduced a new secondary competitiveness and growth objective for the FCA and PRA; the Edinburgh Reforms; and the Mansion House compact, among other initiatives. Now the focus is on ensuring their effective and timely implementation – and this is where our competitive advantage will gain ground, or lose it.
And while our competitiveness is about more than regulation, I do want to focus briefly on the important role that the regulators play. Specifically, ensuring that the FCA and the PRA meaningfully and demonstrably apply their new competitiveness and growth objective in their activities. We have made good progress on accountability, working closely with government on shaping the metrics that the regulators will use to report on their performance against this new objective. Recent research from TheCityUK and Freshfields shows that these will provide world-leading transparency compared to regulators in other jurisdictions, but we do need to make better use of international comparisons for these to be fully effective.
And, as an industry, we have welcomed the enthusiasm with which policy statements have been issued and roundtables have been held by the regulators, setting out how they intend to operationalise this new objective. But, aside from assurances and performance data, the reality and ‘lived experience’ of firms is of course much more important. And, for the time being at least, there is real cause for concern.
If I can point to an example that I’m sure everyone in this room will be familiar with: the FCA’s recent proposals on changing how they publicise enforcement investigations. This one of the first, if not the first, major far-reaching, cross-ecosystem consultations launched by the FCA since the objective took effect. Candidly, it is hard to see quite how the new objective has been thought about. In fact, the impact here would be the opposite: our members feel strongly that the proposals threaten to damage the UK’s competitiveness. So, while the this isn’t an issue solely in the hands of the regulators, it is vital that we as a country recognise that investment will inevitably be choked if they do not play their crucial part in helping create and support the conditions for economic growth.
Getting this right will be fundamental in ensuring the long-term prosperity of the UK, and will be critical to our success as we navigate an increasingly unstable and turbulent world. More broadly, underpinning the industry’s ability to successfully deliver change, and drive growth and competitiveness, is the need to move on from the ‘safetyism’ mindset that has developed within our regulators, government and society as a whole.
Our society’s approach towards risk has shifted dramatically in recent decades, to the extent that risk mitigation has too often become risk elimination. And while it is crucial to protect consumers and manage systemic risks, regulatory policies and mindset must be carefully crafted to balance these needs with those of growth and investment. Without risk there is no growth, no innovation, and no improvement in productivity. As a society, we need to change the question from “how do we stop things going wrong?” to “how do we help things to go right?”
Without this new, strategic approach to growth and investment we face a lack of long-term savings and investments that will be required to meet the demands of pensions, healthcare, and other needs. We must have a national conversation about how we consider the trade-offs between risk and growth. This balance is essential for sustainable economic growth and to provide satisfactory returns on savings and investments for individuals.
One critical area of focus for our industry, in partnership with the regulators and government, must be doing more to facilitate opportunities for retail investors in UK equities. Too few of our citizens are benefiting from share ownership and the long-term returns this can offer. This particular issue presents us with a dual risk: the inherent risks of investing and the risk of not investing enough. Bolstering UK capital markets and boosting UK investment in UK equities is just one piece of the competitiveness puzzle, but it is a vital one.
So, with a general election on the horizon in the UK, as well as many elections taking place around the world, and with the ongoing geopolitical and economic conditions in which we are operating, communicating and then delivering the enabling role of our industry in driving growth will be essential. But we must continue to shape our regulatory and political environment in order to maintain the UK’s position as a world-leading international financial centre.
Our enduring partnership with Guernsey is, therefore, more important than ever as we look to address these challenges and take full advantage of the opportunities. As we navigate these complex times, marked by change and uncertainty, our shared commitment to fostering a productive, innovative financial and related professional services industry is key. We must leverage Guernsey’s strengths and our national capabilities to propel forward-thinking strategies that drive sustainable growth. By doing so, we ensure that the UK continues to thrive as a premier global financial centre, fostering economic prosperity for generations to come. Thank you.
