New Prime Minister Liz Truss already had an unenviable reception tray of pressing issues to deal with when she arrived at Number 10. The fact that her appointment was followed just 48 hours later by the sad passing of our monarch to the most ancient reign only reinforced the meaning. that Truss inherited the post at a truly historic time for the country.
For many, Queen Elizabeth II had been a constant and reassuring presence in their lives. The transition to King Charles III, while seamless in its execution, will add another sense of upheaval at a time of conflict abroad and severe economic stress at home. With so many challenges ahead of her, all eyes were first on the best team Truss would appoint to support her around the Cabinet table.
Truss’ Cabinet Picks
The most important Cabinet appointment for any Prime Minister is their neighbor at number 11, the Chancellor of the Exchequer. By naming an old friend and fellow traveler in the liberal wing of the Conservative Party in Kwasi Kwarteng, Truss is ensuring (as best she can) that she will have a strong ally by her side who will work in tandem rather than in conflict when it comes to adopting an economic vision for the country.
Some speculation during the leadership race has suggested that a Truss government would completely destroy the current architecture of financial regulation
The more controversial appointment of Jacob Rees-Mogg to the pivotal business and energy portfolio at BEIS was underpinned by similar logic, given Rees-Mogg’s deregulation and low-tax instincts. Indeed, across the Cabinet, Truss has opted for a team that broadly aligns with his own worldview rather than seeking to foster a broad church.
What does this mean for key pieces of legislation, such as the landmark Financial Services and Markets Bill (FSMB)?
Impact on the Financial Services and Markets Bill
The FSMB represents the most significant piece of financial regulatory reform in the UK since the tranche of legislation following the financial crisis. It will repeal EU laws and devolve powers to UK regulators, set new targets for financial regulators to take economic growth and international competitiveness into account in their rule-making, strengthen engagement and parliamentary oversight over the regulatory architecture and will create entirely new regulatory regimes in some of the areas such as stablecoins and critical third parties.
The question now is whether Truss and his team will seek to go even further.
Some speculation during the leadership race suggested that a Truss government would completely destroy the current financial regulatory architecture, merging the FCA, PRA and payment systems regulator into a single new entity.
One area to watch as the bill moves through committee stage and beyond is pension market advice and guidance.
Although this seems unlikely at this point and is probably more of an example of kiting during a campaign, what seems likely is that the Treasury will go further in reducing the load global regulatory burden on businesses. We will also see the government introduce ‘appeal’ powers for ministers to review regulators’ decisions, which was omitted from the bill introduced by the Johnson administration.
Pension advice and support
One area to watch as the bill moves through committee stage and beyond relates to pension market advice and guidance. Former municipal minister Harriet Baldwin is likely to push for an amendment that would provide more personalized advice through innovation and technology. Others are pushing for stronger statutory goals around Net Zero, competitiveness and financial inclusion.
The man who will steer the bill through the Commons will be former Boris Johnson policy chief Andrew Griffith, appointed by Truss as Financial Secretary to the Treasury and taking on the role of City Minister. Between them, Truss, Kwarteng and Griffith hope to emerge with a bill that significantly improves the position of the UK financial sector in the world. For Truss, however, this is just one major task among many.
Simon Fitzpatrick is Head of UK Public Affairs at Cicero/AMO