The industry must show responsibility before regulations become less stringent

The financial services industry needs to show it can use power and influence “responsibly” before regulation becomes less stringent, according to Phoenix Group chairman and former Mayor of London Nick Lyons.

Speaking at the Council’s Capital Release Summit last week, Lyons said that if the financial services industry wants regulation to change, it must be responsible in the use of power.

“Throughout my term as mayor, I have talked about financial services and how we have had a leading and outstanding financial services center in London for 400 years,” he said.

“We have always been resilient, we have always been resourceful, but we have not always been responsible.”

Lyons said this was particularly important given the UK’s current economic environment.

“There is a very risk-averse climate in this country, and not much has changed since the global financial crisis,” he explained.

“After the crash, we set major targets for both the Financial Conduct Authority and the Prudential Regulation Authority, mainly to make sure we never experience a global financial crisis again.”

He added that, in line with this goal, both regulators have “suffocated” financial services with regulation.

“Where are we going? Governments don’t really have a lot of levers to pull. They can’t pull the borrow-and-spend lever and they can’t pull the tax-and-spend lever very much,” he said.

As a solution, Lyons suggested that the private sector, and more specifically financial services, must “step forward.”

Pensions

Lyons also discussed another pressing issue regarding financial services, pointing out that the UK has the second largest pension system in the world, worth around £4-5 trillion.

But he added that little of it is invested in productive assets and that the industry must “ensure a return on these savings.”

According to Lyons, one way to increase these profits is to modify the current automatic registration system.

He explained that currently the contribution is 8%, of which 5%. employees contribute, and 3 percent employers.