Despite not achieving the overall majority they were looking for, it looks like the Conservatives, propped up by the Democratic Unionist Party (DUP) in Northern Ireland, will continue in government for the next five years following the dramatic outcome of last week’s UK General Election.
With that in mind, let’s look at a selection of the Conservative manifesto statements that will impact on the regulatory environment, and take a view on how this might affect our industry going forward.
Here’s what the manifesto said about effective regulation:
Regulation is necessary for the proper ordering of any economy and to ensure that people – and their investments – are protected. However, poor and excessive government regulation limits growth for no good reason. So we will continue to regulate more efficiently, saving £9 billion through the Red Tape Challenge and the One-In-Two-Out Rule. Reducing the cost of regulation is not just about reducing its volume. The wrong regulatory frameworks can over-reward investors for the risk they are taking in backing a particular project, meaning households and businesses can become systematically overcharged. We will therefore examine ways in which the regulation of utilities and transport infrastructure can be improved to deliver a better deal for customers and sharper incentives for investment efficiency.
It’s comforting that the new government recognise the importance of regulation, not only in financial services, but also in other sectors like transport and utilities. Making regulation more effective is a challenging objective and there will, no doubt, be industry consultations about how best this can be achieved.
It could be a busy few years ahead for the regulatory sector, so watch this space.
Stopping tax evasion
Here’s what the manifesto said about tax evasion:
We have taken vigorous action against tax avoidance and evasion, closing the tax gap – the difference between the amount of tax due and the amount collected – to one of the lowest in the world. We will now go further. We will legislate for tougher regulation of tax advisory firms. We will take a more proactive approach to transparency and misuse of trusts. We will improve HMRC’s capabilities to stamp down on smuggling, including by improving our policing of the border as we leave the European Union. We will also take further measures to reduce online fraud in Value Added Tax.
Tightening regulation of tax advisory firms links into the earlier point of making regulation more effective. There are certainly areas in the UK’s tax system that continue to be exploited by criminal activity, so this is welcome news and should help in the ongoing fight against financial crime.
Better corporate governance
Here’s what the manifesto said about corporate governance:
The modern joint stock company is a British invention. It works because it is rules-based, but the rules need to change as the world changes. Boards should take account of the interests not just of shareholders but employees, suppliers and the wider community. To ensure employees’ interests are represented at board level, we will change the law to ensure that listed companies will be required either to nominate a director from the workforce, create a formal employee advisory council or assign specific responsibility for employee representation to a designated non-executive director. Subject to sensible safeguards, we will introduce, for employees, a right to request information relating to the future direction of the company. These strengthened arrangements will apply to publicly-listed companies. We will consult on how we might strengthen the corporate governance of privately-owned businesses.
Corporate governance is a key part of how an organisation can demonstrate how it is controlled, which from a compliance perspective, is vitally important. Any changes or improvements to the corporate governance arrangements should be welcomed, and if those changes are designed to provide more transparency for employees, this should also help to harness the right culture.
This final point is not directly linked to financial services or the regulatory sector per se, however, it does tie in nicely with the aspirations we have here at International Compliance Training.
Here’s what the manifesto said about career learning:
We will in the next parliament produce the best programme of learning and training for people in work and returning to work in the developed world. We will help all workers seeking to develop their skills in their existing jobs by introducing a new right to request leave for training for all employees. Alongside this, we will help workers to stay in secure jobs as the economy changes by introducing a national retraining scheme. Under the scheme, the costs of training will be met by the government, with companies able to gain access to the Apprenticeship Levy to support wage costs during the training period. We will break down the barriers to public sector workers taking on more qualified roles because of their prior educational attainment. For instance, we will ensure that teaching assistants can become qualified teachers and healthcare assistants can become nurses via a degree apprenticeship route, in addition to other routes. We will equip people with the digital skills they need now, and in the future, by introducing a right to lifelong learning in digital skills, just as we have done for literacy and numeracy.
As many of you already know, career learning is at the heart of what we do at ICT. We also want to introduce opportunities to all those working in the regulatory sector, or with a desire to do so, to develop their knowledge and skills and to make the most of what continues to be an exciting and rewarding profession.
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