London’s financial dominance is under siege. In the City not a day goes by without senior executives with serious media pull shouting about how completely useless our regulators are and what a dreadful country we are for business in general because of it.
There’s currently so much open hostility towards London it’s hard not to think seasoned executive Albert Manifold (CEO of CRH PLC), technology titan Masayoshi Son (CEO of SoftBank and majority owner of microchip giant Arm Holdings), trainee technology titan Nikolay Storonsky (CEO of challenger bank Revolut) and others don’t have a point in dismissing London as a competitive financial centre, and as undeserving of their businesses.
British fintech company Revolut has been waiting over two years for the Financial Conduct Authority and Prudential Regulation Authority (PRA) to award it a full UK banking licence. Revolut CEO Storonsky hasn’t held back in venting his frustration. He’s mentioned waiting for emails and letters “for months” and stated, “it’s hard to do business in the UK”.
So why do we care about the toings and froings between a multi-billion-pound UK fintech company and our regulators? Simply because other companies considering London as a home will be watching the process, whatever the outcome.
I have recently been working with a successful European fintech company looking for growth capital and seeking an initial public offering (IPO). London, to me, would be the ideal place for this company. The founders, citing the latest news about Revolut, completely dismissed the idea. Ten years ago, they would have seen it as the pinnacle of success to have a London listing.
The Government isn’t blind to the damage frequent corporate criticisms are causing to London’s reputation as the place to be to scale new economy businesses.
It has been reported that Kemi Badenoch, the Business Secretary, is so alarmed by Revolut’s threats to up sticks and go to France (or Spain) she is seeking an “emergency meeting” with the company this week. Although I’m unsure how it would play out if Kemi met Nikolay on a Monday and miraculously, the “independent” PRA issued the licence on Tuesday? My advice, Nikolay, is don’t take that meeting.
Independent regulators can see that London’s pre-eminence is under threat and in response, that changes are promised. But Nikhil Rathi and Andrew Bailey, the respective heads of the Financial Conduct Authority and the Bank of England-controlled PRA, fail to understand that this unchecked rising crescendo of dissatisfaction will have consequences. There’s a growing narrative that London is closing the door on business and our institutions are doing nothing to counter it. This vacuum is being filled by influential executive public anger.
It took the Thatcher Government just three years to launch the 1986 “Big Bang”. That seismic deregulation of financial markets in the UK propelled London to become the world’s premier financial centre. The Government has had the Kalifa Review of UK Fintech, Lord Hill’s report on listings, and the Edinburgh Reforms on banking. Policy recommendations are being drowned out by ever more outspoken CEOs.
Increasingly, powerful businesses hold the news cycle with problems they are encountering, and these stories reverberate around the world damaging London’s reputation and prospects. The UK is at an inflection point, driven not just by the changing demands of global business and Brexit but by the broader challenges created by having had five prime ministers in six years and no stated, or consistent industrial strategy. Our “stable” reputation has been severely undermined. London can lead the UK out of its malaise, by implementing modernisation, and by being seen and heard to be doing so.