“May finance be a form of service, and an instrument to serve the people, and to care for our common home!” – Pope Francis
The climate crisis. Inequality. The impact of the cost-of-living increase. If these concerns are keeping you awake at night, then you need to also care about the future of financial regulation.
Financial regulation might feel distant and complex. It’s not a hot topic of conversation for most of us, but it affects all of us. Regulators make sure the finance sector operates within the rules, so that the money in our savings is there when we need it, we don’t get mis-sold financial products and insurance companies treat us fairly. This matters, particularly to the poorest in society.
Regulation should also help the finance sector pay attention to the bigger picture. The 2007-08 global financial crisis had a devastating impact. Regulation was tightened up to restore trust and stability and reduce the risk of future crises. But we are a long way from having a finance sector that is inclusive, that reduces inequality and helps us build a greener economy. Financial regulation could be a key tool in the UK’s response to the climate crisis.
Why are we speaking out now? The government is currently consulting on the Future Regulatory Framework Review. This will shape how financial services are regulated now that the UK has left the European Union.
John Glen MP (Economic Secretary to the Treasury) has called the Review a ‘once-in-a-generation’ opportunity. He envisions ‘a sector that is globally competitive and acts in the interests of communities and citizens, creating jobs, supporting businesses and powering growth across the UK.’
The finance sector could be the driving force behind a fairer, greener society but there are several things that concern us about the current proposal.
- It doesn’t go far enough on climate. UK banks, asset managers and other financial institutions are responsible for nearly double the UK’s annual carbon emissions and have direct links to rainforest deforestation. If regulators were tasked with helping achieve the UK’s emissions reduction targets, we could turn this around, and instead have a finance sector that prioritises nature and leaves fossil fuels in the ground.
- We need to do more to tackle inequality. Our current financial system does not serve the poorest and most vulnerable in society. People on low incomes end up paying more for credit and insurance or are unable to access the services they need. 1.3 million UK adults don’t have a bank account. Regulators should be given the power to do more to promote financial inclusion.
- Competitiveness should not be the priority. The proposal wants regulators to promote the international competitiveness of the industry. Competitiveness, without regard to the cost to people and planet, is not sustainable. The danger is that competitiveness becomes the leading priority and purpose of regulation, undermining efforts to tackle the climate crisis or build a fairer society.
As Christians we should care about the way the finance sector operates and is regulated. Everyone should have access to the financial services they need to participate in society, and together we should be making sure our money is contributing to the common good.
That’s why ECCR has joined with other civil society organisations today in signing a joint public statement calling on the government to ensure the UK’s finance sector works for people and planet.
Will you join us in calling for a fairer, more sustainable financial sector?
Rosie Venner, Money Makes Change programme manager
- “May finance be a form of service, and an instrument to serve the people, and to care for our common home!” Join us in the words of this prayer by Pope Francis .
- Could you send your MP a quick tweet or email with a link to the joint statement? Let them know that this is something you care about. You can find out who your MP is and how to contact them here: https://members.parliament.uk/FindYourMP
- Join our Green Your Money community. Sign up to take a step to green your finances and help build consumer demand for a greener financial system.
We want to see a world where money is used to shape a fairer, greener future. With your support we can continue to resource and equip Christians across the UK to better connect their faith and finances.