Reform: danger signs for financial services – and their customers

Reform UK’s sustained rise in the opinion polls and local elections can no longer be ignored by those who hope that Farage and co never get the opportunity to put their distorted, divisive, ignorant policies into action by playing a part in the government of this country.

As the drip, drip of detail seeps out from what passes for policy making machinery in Reform, we can see its agenda is being shaped by the MAGA (Make America Great Again) agenda being relentlessly pursued by President Trump. It is surprising just how little detailed scrutiny this is being subject too.

This seems especially true of financial services. Last month at Reform’s conference we heard the start of Nigel Farage’s assault on the current regulatory regime for financial services. This featured a pledge to scrap much of what was put in place after the global financial crisis. It included a strong commitment to what Reform is labelling as “self-regulation”, perhaps involving the complete abolition of the Financial Conduct Authority.

This was followed up by a more specific pledge to abolish the FCA from Aaron Banks, founder of the Leave.EU campaign and a former insurance broker close to Farage. In an interview with the business publication Insurance Age, he said the FCA and the Solicitors Regulation Authority should both be abolished. He said nothing about how the self-regulation would replace them would work.

Last week, Farage unveiled another facet of his policy for the financial services: greater political control over the Bank of England, another policy straight out of the MAGA playbook. Does he have an original thought?

Fascination with crypto
A few days later he made an appearance at the Zebu Live conference in London, best described as a gathering of crypto zealots. Again, he was mimicking his hero Trump, who has embraced the world of digital assets and crypto, making sure he and his family profit handsomely from it, not least by lessening the regulatory oversight of the sector.

Farage gave a lot away at the Zebu event, lauding the lack of transparency and accountability of crypto assets: “Being in control of your own money, making your own decisions, free from authoritarian government. Crypto is the ultimate freedom of the 21st century and debanking taught me that for life”, a reference to his own dispute with Coutts in 2023. 

Do we really want a parallel financial world where the already rich, and often disreputable, can make themselves richer with no accountability?

I continue to shudder at the way the super-rich never stop at seizing any opportunity to make themselves richer, while many, like Farage, build a narrative to appeal to those who feel society has left them behind, by demonising and dehumanising people who often have even less themselves or are even more vulnerable.

This obsession with deregulation makes me fear for the wider good of society. Let’s be clear, the sort of self-regulation Reform envisages would be a charter for spivs, charlatans and crooks. We have tight regulation in financial services because there have been too many examples of the unscrupulous using lax regulation to exploit people.

Scandal is never far away
I have reported too many major financial scandals to know that light touch regulation is always a failure. Payment protection insurance, endowment insurance and personal pensions mis-selling and the most recent, the £11bn car finance scandal, are just a glimpse of the scandals that explain why we have tight, compulsory regulation. Lessening that is very hard to justify if you believe people need protecting from those who would take advantage of them.

Is the current statutory regime occasionally over-prescriptive? Probably. But rarely does a year go by without some necessary intervention by a regulator to protect customers show why an empowered, independent regulator is essential. It creates a level playing field which protects the majority of ethical, honest businesses, as well as consumers.

What Reform wants to do will open up our financial services sector to crooks and charlatans who will exploit people and businesses. They have nothing to offer the City, the financial services sector or the country.