The personal investment advice sector continues to attract attention for many of the wrong reasons with a heavy emphasis on the harm that has been done by negligent advice in areas such as defined benefit pension transfers. This is still prevalent even at a time when the affect of the global covid-19 pandemic is biting at its hardest in the United Kingdom.

From my perspective, the UK government should be trying to help shift the narrative, and although it may seem like a low priority given the scale of the job ahead, look for ways to emphasize the importance of promoting the virtues of those industries that are not only able to function during this time but are also major contributors to employment and GDP. This non-pecuniary endorsement from the Government could ensure that the increasing number of job losses from sectors which are unable to maintain operations are not as long-term or permanent due to absorption where growth remains possible.

My point is that we should not be looking only to the supermarkets, delivery companies and online tech firms to make up for these job losses. Industries such as financial services can also offer safe harbour during these times and create long-term sustainable career prospects for many.

Whatever your individual perspective on the importance of financial services, it’s hard to argue the fact that it is a major contributor to GDP in the UK. According to a House of Commons briefing paper dated 31 July 2019, financial services contributed £132bn or 6.9% of total UK economic output at the end of 2018 and the UK financial services sector was the seventh largest in the OECD at that time. Furthermore, there were 1.1 million financial services jobs in the UK, 3.1% of all jobs at that time. In 2017 the UK financial services sector was responsible for GBP60 billion of exports versus imports of GBP15 billion, contributing a surplus trade of GBP44 billion.

The financial services sector contributed GBP29 billion in tax in the year ending 1 April 2018, which is relevant in the context of the national conversation being held now about, how in years to come, the country will be able to repay the debt which is being taken on to prop up the economy, and ultimately why we should be looking at financial services as an essential contributor to the economic recovery of the UK post pandemic.

I understand the work the FCA is trying to do in extricating bad behaviours from the industry is of vital importance, however the burden of increasing FSCS levies and associated costs being transferred to the firms that remain, is pushing the industry to a tipping point at a time when we could be seeing a real contribution to the economic recovery from financial services.

 

 

Tim Little

28 September 2020

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