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Good evening, everyone.

Thank you so much to UK Finance 鈥� and David Postings in particular 鈥� for the invitation to speak to you this evening.

Back in the September I became the longest serving Economic Secretary to the Treasury since the role was created back in 1947. And after nearly four years in the job, I want to talk this evening about some of the things I have learnt, but also to set out some new directions for the future of financial services in our country.

It was the very first Economic Secretary 鈥� Douglas, later Lord Jay 鈥� who penned the line: 鈥榯he gentleman in Whitehall really does know better what is good for people than the people know themselves鈥欌�� often abbreviated to 鈥榯he gentleman in Whitehall knows best鈥�.

Well, I certainly don鈥檛 believe that the gentleman in Whitehall knows best. I know that it is the people in this room who will innovate, compete, spot new opportunities and build world-class businesses. My job as Economic Secretary is to help build the right framework in which you can prosper, not just for the short term, but sustainably into the future.

The future health of this industry 鈥� and, frankly, the economic health of the country 鈥� relies on those of us in this room continuing to discuss鈥� and design鈥� and then shape that sustainable future we all want together.

And that is the first of my simple reflections this evening鈥� the health and wellbeing of financial services is our responsibility鈥� and it鈥檚 up to all of us, together, to build the sector we want to see.

Public attitudes

For the most part, I think we鈥檙e making progress.

I see many positive things happening all across the industry鈥� especially from colleagues in our banks, who have worked so hard since the global financial crisis to get their houses in order.

The Prime Minister himself has made the point that just as we clapped for the NHS during the pandemic so we should applaud those who make the NHS possible鈥� 鈥渙ur innovators鈥� our wealth creators鈥� our capitalists and our financiers鈥�.

But unfortunately, at least for the moment, not everyone yet feels the same way.

According to a recent YouGov poll, only 3% of adults feel 鈥榲ery favourable鈥� about the banking industry.

We can all understand why that may have been the case a decade ago鈥� and we should continue to recognise the impact the financial crisis had on so many鈥� but it鈥檚 not a statistic we should be happy with or resigned to.

As we open the Chancellor鈥檚 鈥渘ew chapter鈥� for financial services, it鈥檚 only fair we acknowledge that banks have taken steps to repair the damage, including by making a bigger tax contribution in the years since the crisis.

And we should do what we can to help the public recognise that contribution and begin to see our banks in a similar light to other parts of the sector.

We need to dispel that myth of the bad banker, and replace it with what is increasingly the reality鈥� of the innovative banker or entrepreneur finding new and better ways of doing things鈥�new propositions, new offerings and new operating models鈥� in turn, benefiting consumers, businesses and communities.

Because financial services are essential services鈥� on which millions of people rely day-to-day.

New and better ways of doing things have certainly been evident during the pandemic 鈥� for which the Government and I owe all of you a great deal of thanks 鈥� but, sadly, when it comes to public perceptions, we still have a journey to go on.

And that鈥檚 my second simple reflection from my time in the job: earning and then maintaining a good reputation is an ongoing challenge鈥� one that we cannot and should not duck.

Financial services and the challenges of our time

Now, I said I鈥檓 grateful to you for everything you and your staff have done through this extraordinary dark tunnel that we鈥檝e all been through. And it鈥檚 true.

On the frontline, it was colleagues keeping branches open鈥� staffing call centres鈥� supporting vulnerable customers in any way they could.

In the back offices, it was people rolling up their shirtsleeves and working with government and regulators to deliver tens of billions of pounds of emergency loans to businesses across this country.

I鈥檝e been delighted to see financial services staff recognised for their efforts, be it in the Queen鈥檚 New Year honours, or Downing Street press conferences.

We had to shut the country down鈥� just like that鈥� overnight鈥� and yet, thanks to your efforts, things kept working.

The industry鈥檚 鈥楩inest Hour鈥�?鈥� It may well be.

But your economic contribution is, of course, vast.

And that old clich茅 about financial services being synonymous with the Square Mile is as out of date as bowler hats and pinstriped trousers.

37,000 people employed in Northern Ireland鈥� 69,000 in Wales鈥� 153,000 in Scotland.

And I see the reality of what that means in places like Leeds and Glasgow and Cardiff鈥� and I know how important it is.

The sector is also making progress on ensuring the very best people for the job have equal opportunity to succeed鈥� no matter their race, gender or background.

Diversity and inclusion isn鈥檛 just the right thing to do, it鈥檚 the smart thing to do.

You all know, too, the role finance is playing in tackling climate change.

The Government is taking very deliberate action to transform the UK financial sector and align it with the Paris Agreement.

According to Z/Yen, London is now the leading global hub for green finance.

I think COP26 demonstrated our willingness to lead in this space. Now we need to get the right people and ideas in the room to chart and build those crucial transition pathways.

Which brings me to my third simple reflection: financial services are about so much more than trading floors and the Square Mile.

They鈥檙e about opportunity鈥� and levelling up鈥� and tackling some of the biggest challenges we all face including climate change鈥� and we鈥檙e probably only just scratching the surface of what the sector can achieve.

And I think that鈥檚 a conclusion more and more people are coming to. Like the woman I met recently who told me about her decision not to go to university鈥� so she could get on and join a financial services firm instead. A firm in which she went on to have a distinguished career. All because, as a 19-year old working for an insurance company, speaking regularly to customers, she鈥檇 seen the difference the sector was making in people鈥檚 everyday lives 鈥� with direct impact on those individuals.

Insurance, pensions, savings, business loans, mortgage products, fintech鈥� all with positive, real-world implications for citizens, communities and the economy as a whole.

A new culture of regulation

Now, when I was privileged to be appointed to this job in January 2018, it鈥檚 no secret that the future was uncertain. Politics was stuck 鈥� that鈥檚 a polite way of putting it. Our future relationship with the EU was unclear.

Today, the landscape is much clearer. We鈥檝e left the EU鈥檚 institutional framework. And step by step, where it makes sense, we are taking advantage of those new freedoms to refresh the UK鈥檚 position as the world鈥檚 pre-eminent financial centre.

Now, part of that is about regulation.

Both in the UK and abroad, I hear how respected our regulators are.

And I want to thank the staff, at all levels of seniority, working hard in our regulators to maintain the health and reputation of our financial system.

Nikhil Rathi, Sheldon Mills, Sam Woods, Sir Jon Cunliffe, Sir Dave Ramsden鈥�. all great examples of the quality of the public servants who devote themselves to this endeavour at the FCA and PRA, and the Treasury too.

I also want to take this moment to acknowledge the work and dedication of Katharine Braddick at the FSA, Bank, and Treasury.

I am very fortunate as a minister, and we are very fortunate, as a country, to have them all.

There will always, of course, be times when our regulatory system could have performed better.

What鈥檚 important, looking forward, is that we increase transparency and learn the right lessons for the future.

I believe that our regulators must also remain on the front foot in the face of rapid innovation, and a digital age.

The FCA鈥檚 Transformation Programme, spearheaded by Nikhil and his executive team, seeks to do just that.

I fully support the ambition to transform the FCA into a more nimble and innovative regulator鈥� and look forward to seeing this ambition turned into reality over the coming weeks, months and years.

The Financial Ombudsman Service will also shortly publish the conclusions of its independent review on how to improve the FOS鈥檚 operational effectiveness and allow it to adapt to meet future challenges.

But we can鈥檛 of, course, rest on our laurels.

And that is my fourth simple reflection: maintaining our regulators鈥� strong reputation needs to go hand in hand with a continuous process of reflection and refinement.

We must look at our regulatory framework and challenge ourselves on how to ensure it is fit to deliver what we now need.

We need a regulatory framework that is more agile and more responsive than we have ever had before. That avoids politicisation and posturing but gives decision-making to the independent and expert regulators, so that we can regulate better, more quickly, more flexibly. To my mind, it is a completely false choice to say that we have to choose between high standards OR greater competitiveness. We need regulators who think carefully about both.

We shouldn鈥檛 think of regulation as being like the Ten Commandments, fixed forever on tablets of stone. Regulation is not a science: it is the best attempt very good people make to calibrate and manage risk at a given point in the life of an economy or society.

So of course it should be able to evolve and that doesn鈥檛 mean endlessly tweaking rules with limited benefit. But it should mean regulators having the self-confidence to ask themselves whether they have got the right balance, whether there are any unintended consequences of what they have done, or whether they are placing too great a burden on firms trying to do the right thing.

Yes, of course, regulators must be free to take action 鈥� and sometimes fast action 鈥� to tackle bad apples and get them out of the market.

But they should also work collaboratively with industry, to understand their often new business models, and to foster innovation and technological transformation safely and responsibly.

The Future Regulatory Framework Review consultation published a fortnight ago sets out how we propose to deliver this.

It restates our belief that independent, expert and internationally respected regulators are the right bodies to determine regulatory requirements鈥� within a framework and guardrails set by Government and Parliament.

In particular, they must reflect the importance of the financial services sector as the plumbing of鈥� a utility for鈥� the wider economy鈥� and the need to support the future strength and viability of the United Kingdom as a global financial centre.

And to those who say competitiveness must be the only driver of everything regulation does, I think that is to misunderstand how competitiveness is achieved.

Resilient and efficient markets, underpinned by effective regulation and competition are essential prerequisites for fostering an internationally competitive and respected financial services sector. The regulators must be able to act creatively and purposefully鈥� so that the UK continues to be a stable and resilient place to base a global business.

So, we will be engaging with you in the coming weeks 鈥� but I hope you agree that the proposals form the basis for ambitious and comprehensive reform of our regulatory regime鈥� one that will support the sector鈥檚 future, and allow it to continue delivering for the UK.

And this brings me to another crucial point 鈥� about a culture and mindset.

There鈥檚 a case, I believe, for establishing a more interactive, rolling dialogue between the regulators and industry鈥� where we think of regulation not as just simply 鈥榩olicing鈥� the system 鈥� that is very important - but enabling the system鈥� a better informed, more nimble regulation which, in turn, reduces misunderstanding and minimises time lags.

That would be better for everyone 鈥� not least because it would help identify conduct risks before the red lights start flashing鈥� and help us deal with them proactively before they become a problem.

That means getting inside, and being comfortable with, the mindset of the entrepreneur. And vice versa.

Because when we understand each other 鈥� and collaborate 鈥� we achieve much more.

New kinds of collaboration

That, for me, has been the lesson of ongoing work on access to cash鈥� which has involved collaborative thinking 鈥榦utside of the box鈥�.

And I thank David Postings for his remarks a little earlier.

Together, industry, government and the regulators maintained access to cash through the pandemic鈥� and, together, we鈥檒l protect that access 鈥� on which many people still rely 鈥� for years to come.

For our part, government is progressing legislative proposals to protect cash for the long term. And I know industry has been hard at work through the Cash Action Group on innovative and collaborative new initiatives to support cash users. I thank Natalie Ceeney and her team for what they have done. This is great to see, and I want these respective efforts to support each other, to the benefit of customers.

From Access to Cash to the Productive Finance Working Group and in the productive development of the Long Term Asset Fund 鈥� I鈥檝e seen plenty of recent examples of deep dialogue leading to results.

And on the Wholesale Markets Review, I鈥檓 pleased to see the broad consensus on the vast majority of the issues identified in the consultation document. I will be publishing a full summary of the responses to the consultation early in the New Year and will set out the Government鈥檚 plans to take this work forward.

Given the level of interest in this review, I wanted to give a brief update on our plans here.

In particular, I can confirm that it is the Government鈥檚 intention to legislate as early as parliamentary time allows to implement many of the changes identified in that consultation document.

For example, I noted the overwhelming support to give firms greater choice about where they can trade and therefore get the best prices for investors.

I can therefore confirm that we will revoke the share trading obligation and the double volume cap.

We鈥檒l also be recalibrating the transparency regime for fixed income and derivatives markets鈥� to ensure that the right instruments are subject to transparency requirements and to remove unnecessary burdens for firms.

And we鈥檒l be reducing the scope of the position limits regime for commodity derivatives and transferring the setting of position limit controls from the FCA to trading venues. This will remove barriers that are preventing the build-up of liquidity. In the meantime, I welcome the steps that the FCA has taken through supervisory action and I support their continued use.

These are just a few of the changes we will be bringing forward. We are working closely with the FCA on this agenda as some reforms will require regulators rule changes or guidance鈥� and the FCA has already committed to starting that process in the New Year.

Similarly, on the prospectus regime review, I鈥檓 delighted to say that there was extensive support across the sector for the proposals we made in our consultation, and I look forward to quickly progressing these important reforms.

Our proposals, which follow the Hill review, will make the UK鈥檚 prospectus regime simpler, more agile and more effective鈥� widening participation in the ownership of public companies, ensuring investors receive the best possible information, and simplifying the capital raising process for large and small companies on UK markets.

Looking to the future

My final reflection, though, is about the future.

The reality is that we鈥檙e at something of an inflection point. There are challenges鈥� but great opportunities too.

We, as the UK, need to be at the forefront of change鈥� just as we have been for centuries鈥� be it pioneering the use of paper banknotes in the seventeenth century, the first regulated stock exchange in 1801, or the first ATM 鈥� in Enfield - in the 1960s.

In his Mansion House speech in July, the Chancellor said 鈥渨e should be proud that people around the world look to this country for leadership.鈥�

And, of course, he鈥檚 right.

We have an opportunity 鈥� and a responsibility 鈥� to lead the world. On setting and maintaining international standards. On green finance. On fintech. On retail investment. On financial services trade agreements.

And we are.

We鈥檙e the first country to commit to making disclosures aligned with the Task Force on Climate-related Financial Disclosures fully mandatory across the economy鈥�.

We鈥檙e taking forward the key recommendations of the Kalifa Review on UK Fintech鈥� ensuring the UK remains at the global cutting edge of technology and innovation in financial services.鈥疉nd yes that does include 拢5 million of funding in the Spending Review to create the Kalifa Review鈥檚 recommended new Centre for Finance, Innovation and Technology, which will leverage expertise from across the regions to accelerate UK fintech.

And we鈥檙e developing new responsible and well-regulated opportunities for retail investors鈥� which are, in turn, helping to grow the real economy.

I am committed to seizing this opportunity to deliver change 鈥� right across the board 鈥� and working with you to prioritise those areas that will have the biggest impact.

Which is why my fifth and final reflection is the same as my first: the health and wellbeing of financial services is our responsibility鈥� and it鈥檚 up to us to build the sector we want to see.

Ladies and gentlemen鈥�

Those of us in Whitehall don鈥檛 always know best.

But we do believe 鈥� I believe 鈥� in the extraordinary potential of our industry鈥�your industry鈥� in the quality of its leadership and regulators鈥� in its ability to be a force for good 鈥� a sector which is guided by high standards鈥� allowing the UK both to retain its cutting edge and meet the needs of its citizens and communities鈥� a sector which contributes day-in day-out to the economic wellbeing of the country鈥� and which, one day, I hope gets the credit it deserves.

Thank you very much.