‘What reforms?’ City leaders underwhelmed by Rachel Reeves’ financial strategy

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Under the gilded ceiling of the Mansion House’s Egyptian Hall about 300 City grandees were asked to charge their glasses of Mâcon-Montbellet La Bergerie to the “health of the chancellor of the exchequer”.

Rachel Reeves was speaking for the second time at the Mansion House dinner, fresh from unveiling her “Leeds Reforms” — a long awaited financial strategy that promised to “make the country more active and more confident”.

However, amid the grandeur of the occasion on Tuesday night, the gathered audience of chief executives, bankers, pension fund managers and advisers were largely unconvinced. 

There was an uncomfortable consensus that the chancellor’s financial strategy was not the Big Bang-style shake-up that had once been on the table.

“What reforms?” said Sir Michael Snyder, elected member of the City of London.  

He was not alone in expressing exasperation that, despite months of news trailing changes to cash Isas to encourage British savers to invest more, there was still no movement as the Treasury had placed an Isa shake-up in the “too difficult” bucket. 

One FTSE 100 chair shook his head with despair and disbelief that there were still no Isa reforms. 

“The big ‘Tell Sid’ move of trying to convince Brits to buy shares rather than keep their savings in cash is nothing more than a glorified advertising campaign, and we need a hell of a lot more than that to revive our market,” another City veteran said. 

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Others bemoaned the launch of another task force into making London more attractive for stock exchange listings. 

Mark Austin, senior partner at Latham & Watkins, who is on the Capital Markets and Investment Taskforce, said the directions set by the chancellor were “good progress, but we need to keep on shaking the snow globe — that’s how you create change and ultimately growth”.

But the chatter in the hall in the breaks between the speeches was relatively sanguine.

One City adviser said: “There’s no hostility in the air because it’s essentially the status quo and they’ve dropped everything we objected to.”

The chancellor’s Mansion House speech contained nothing on mandating pension funds to invest in British equities — an idea that had created a vocal backlash, with even Charlie Nunn, Lloyd’s chief executive, likening it to capital controls. 

Amid clinking flutes of Nyetimber English sparkling wine, some attendees marked the occasion as a wake for the Financial Ombudsman Service (FOS). Reeves has announced it will have its powers curbed and stopped from being a “quasi-regulator”. 

At last year’s Mansion House dinner — delayed to the autumn due to the July general election — bankers and insurers were frothing with anger about FOS intervening in the motor finance scandal, which put them on the hook for potentially billions of pounds in compensation.

One chief executive of an insurance group said that reforming the FOS was “very welcome, very big news”. Others advocated for the ringfencing shake-ups, which should reduce the capital requirements for challenger banks — which had the nodding approval from the boss of Metro Bank.

However, the conversation never strayed far from what might happen at Reeves’ Autumn Budget, and fears that the same audience applauding the chancellor may also find themselves at the sharp end of a wealth tax raid.

This article was amended to clarify that the Financial Ombudsman Service is due to have its powers curbed but is not being disbanded