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GK Monthly Insights

The GK Insights team goes through some of the previous month’s biggest policy developments, focusing on actions taken by regulators to help consumers through the current economic climate. For more information, please get in touch via 

Sunak’s fintech vision 

Rishi Sunak’s premiership could well see greater emphasis placed on the findings of the Kalifa Review, which had made the definitive assessment of the UK’s fintech sector. As Chancellor, Sunak enthusiastically approved of many of the review’s recommendations and signalled his commitment to their implementation. Last year, while speaking at Fintech Week, Sunak threw his support behind new initiatives derived from the review to boost fintech.  

One of these initiatives was the establishment of a Centre for Finance, Innovation and Technology (CFIT). At Spending Review 2021, HM Treasury confirmed it had allocated £5 million to fund the creation of the CFIT. The body is intended to facilitate collaboration between the tech and finance sectors, as well as the key players expected to drive legislation and regulation affecting the sector; the Treasury and the Financial Conduct Authority (FCA). 

The CFIT Steering Committee (SteerCo) chaired by Ron Kalifa himself, has met regularly throughout 2022 to assess and address perceived opportunities and barriers to growth within the UK. Crucially, the body’s recommendation on a future strategy will be largely led by industry stakeholders rather than the FCA or HM Treasury.  

Although the final strategy is far from certain, it is notable that both Sunak’s Treasury and the FCA were instinctively minded towards light-touch regulation. There is agreement on all sides that policy-makers and regulators should explore how technology and the need for regulation (as well as regulatory reporting) can be balanced effectively. It is likely that the FCA will prioritise the creation of a stable, rather than reactionary, regulatory environment where competition will not be stifled. 

Political and regulatory challenges 

Unsurprisingly, Sunak’s personal views are unabashedly in favour of technological advancement: 

“Our vision is for a more open, greener, and more technologically advanced financial services sector. The UK is already known for being at the forefront of innovation, but we need to go further. The steps I’ve outlined today, to boost growing fintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward. And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre.” 

Nevertheless, political and regulatory realities are likely to slow the pace of Sunak’s technological revolution. Fintech companies have long warned that the UK is unlikely to become a technological superpower if the Competition and Markets Authority (CMA) takes a strict approach to merger control assessments. Instead, they have called for a more flexible approach to enable consolidation within the fintech market (particularly if the ambitions for UK-based companies to become European or even global players are to be realised).  

There have been calls from parliamentarians to pass the Digital Markets, Competition and Consumer Bill, which would facilitate a new digital competition regime and a Digital Markets Unit. Although these calls are motivated by a desire to ensure that the market power of Facebook and Google does not become entrenched. While this may prevent barriers to entry for some start-ups, a potential side-effect is that the mergers between homegrown fintech companies may be made painstakingly difficult. In recent years, we have seen the CMA’s stance on mergers and acquisitions harden as public sentiment and political scrutiny has turned to the tech sector. The CMA and other competition authorities in Europe are increasingly sensitive to consolidation efforts in the sector due to the perception that they have allowed too many controversial deals to be completed in the recent past, meaning that the CMA may choose to take more time in assessing whether certain deals are appropriate.

Addressing the skills gap 

As Chancellor, Sunak was keen to emphasise the link between technological innovation and skills, by launching a Digital Strategy to create new jobs. The issue of skilled migration could cause Sunak some concern. Although Sunak is a staunch proponent of immigration controls, tech bosses have warned of a deficit in skilled workers since the UK’s withdrawal from the European Union, with many concerned that the skills gap has cost the UK economy tens of billions. 

The Kalifa Review advocated for a number of policies that the then-Chancellor pledged to implement. In relation to immigration, this largely involved the scale-up of a visa scheme to encourage skilled overseas workers to join the UK’s tech sector. While the decision was largely welcomed, the government received some backlash from the sector for delaying the process until August 2022. Businesses meeting certain requirements can apply to sponsor individuals working in roles such as software development, engineering and science R&D. Successful applicants will be granted a two-year stay without further sponsorship. By contrast, temporary worker visas have a six-month maximum stay. After five years, applicants can apply for settlement. 

However, Sunak has the unenviable task of balancing this policy with satisfying the demands of right-wing Conservative MPs and some of his own Cabinet ministers. The Prime Minister will be aware that the Home Secretary, Suella Braverman, played a significant role in destabilising an already fragile governing coalition after her visceral objections to Liz Truss’ plan to loosen immigration rules to attract high-skill workers from abroad. 

Sunak’s room for manoeuvre is further limited by the levelling-up commitments that the Boris Johnson administration has made. A key pledge in the Levelling Up White Paper is to increase public investment in R&D ‘outside the Greater South East, by at least 40%, by 2030. Additionally, investment will be increased by at least one third over the Spending Review period. For instance, Chesire’s Hartree National Centre for Digital Innovation will be an area of focus, supporting the development of digital technologies, such as AI and quantum computing. Red Wall voters will be expecting investment in their constituencies and increased job opportunities for local workers.  

However, not only is public spending set to tighten – casting doubt on whether Levelling Up pledges can be fulfilled – the current workforce may not have the requisite skills in the short-term to fill the tech vacancies (without drafting in overseas workers to fill gaps). This three-part problem could force Sunak to compromise on long held ideals regarding public spending or immigration. Ultimately, it means that Sunak’s vision of technological advancement is under serious threat right from the outset of his premiership.

Statement on PRCA Membership


Following reports of serious concerns around the PRCA’s internal processes, GK Strategy has taken the decision to pause our membership of the Association.

We joined the PRCA in recognition of our commitment to the highest ethical standards. Integrity is one of our core values as an agency and until we have seen the results of the review that is being undertaken, and are confident that necessary action is being taken, we can no longer support the PRCA’s processes and leadership. Our directors are former members of the PRCA Public Affairs Board and take our responsibility for the highest standards seriously.

We care about our industry and remain committed to our reporting via the ORCL register.


Louise Allen
CEO, GK Strategy

Scott Dodsworth
Managing Director, GK Strategy; former board member of the PRCA Public Affairs Board

Emma Petela
Director, GK Strategy; former Co-Chair of the PRCA Public Affairs Board

GK Monthly Insights

The GK Insights team goes through some of the previous month’s biggest policy developments, focusing on actions taken by regulators to help consumers through the current economic climate. For more information, please get in touch via

FCA provides update on switching in the mortgage market

Although the FCA chose not to make a major intervention into the mortgage market at the height of the pandemic, we wonder if the number of ‘mortgage prisoners’, might be giving the FCA cause for concern. Last year, the FCA announced that it would seek a ‘proportionate’ response. In other words, a solution for borrowers that would not be too onerous for lenders.

However, the FCA has recently released a statement on mortgage switching during the ‘cost of living crisis’, underlining the fact that approximately half of mortgages currently arranged on fixed rates expire in the next two years. Interestingly, the statement also highlights how many mortgage borrowers have paid comparatively low interest rates in recent years, on both fixed and variable rates – therefore, most will likely face increasing mortgage costs as base rates and the cost of new fixed or other incentivised deals increase.

The regulator has implored lenders and mortgage intermediaries to support consumers to consider their options and potentially facilitate switches to a less costly mortgage if it meets a consumer’s ‘needs and circumstances’.

The FCA has also set out its expectations for mortgage lenders, including giving borrowers in financial difficulty appropriate tailored forbearance. Crucially, this forbearance should consider the individual circumstances of the most vulnerable borrowers. Additionally, firms are expected to help those struggling with debt by directing them towards free debt advice or money guidance.

The FCA has stated that it will continue to track the number of borrowers who are not switching despite the prospect of saving more money. It’s not out of the question that the FCA could also assess the impact of increased costs where cheaper legacy deals are replaced with more expensive ones in a rising interest rate environment. This could lead to dialogue with firms in the mortgage sector to discuss future actions to ensure good consumer outcomes.

We should note, at this stage, that the FCA does not believe that significant regulatory intervention is required, or, at least, it has not said that an intervention is planned. The regulator noted that it thinks that pricing is generally transparent, and the structure of a mortgage product is well understood by consumers.

However, the FCA’s stance may not be ironclad. The impact of this month’s fiscal event looms large over the regulator. Sheldon Mills, who holds responsibility for regulation of consumer finance and competition, emphasised that the FCA is aware of the “upward pressures on mortgage rates” and the removal of certain products in the past week. There is mounting evidence that the FCA is increasingly focused on ‘outcomes’, which means that, in the future, the regulator may not give much leeway to mortgage providers, even if the current circumstances may be beyond their control.

Therefore, the FCA could well return to this issue, if the economic climate worsens or instances of consumer harm increase dramatically, and one would expect that it may adopt a tougher stance that it has done in the past.

FCA takes issue with misleading adverts for Buy Now Pay Later products

Buy Now Pay Later (BNPL) continues to attract the attention of the Financial Conduct Authority (FCA). The FCA has written to providers of Buy Now Pay Later (BNPL) products warning that advertisements must comply with standard financial promotion rules. The Financial Conduct Authority is concerned that some BNPL lenders are misleading consumers through their advertising, which may not notify borrowers of potential risks such as taking on debt that customers cannot afford to repay and the consequences of missed payments.

While conventional promotions by firms have received much attention in recent years, the more recent role of social media in the distribution of BNPL promotions presents the regulator with a familiar problem – preventing consumers from making poor financial decisions.

The FCA’s assertion that some collaborations with influencers could be taking advantage of behavioural biases, leading to impulse buying, is certainly reasonable. However, a ‘minor’ issue for the regulator is the fact that lenders and merchants do not need to be authorised by the FCA to enter into BNPL agreements.

Nevertheless, the FCA is still minded to act on the issue – a sign, perhaps, of the pressure it is under to intervene (rather than simply supervise) in certain markets, as a result of the ‘cost of living crisis’. The FCA has emphasised that the financial promotions of those unregulated / exempt agreements will still need to comply with certain regulatory requirements regardless (depending on who is communicating or approving the promotion). Crucially, this means that not only may unauthorised companies be seen to be breaching rules if they don’t have an authorised firm approve their financial promotions, but also that firms must communicate promotions in a way that is ‘clear, fair and not misleading’.

In terms of next steps, the FCA has stated that it will continue to monitor the BNPL market and act against individual firms found to be non-compliant. This is a development that should surprise no one, given the work that both the FCA and HM Treasury have undertaken to ensure greater regulation of BNPL products. The FCA also expects firms to follow the rules of its new Consumer Duty, highlighting the need for firms approving or communicating financial marketing to have understanding of FCA expectations and the ways in which the ‘cost of living crisis’ could impact consumer outcomes.

This may give the BNPL market cause for concern, as the FCA will soon expect all parties involved in sales to ensure that consumers understand the short and long-term financial implications arising from the purchase of their products. While larger firms operating in other areas of consumer finance, who use more conventional sales and promotions methods, have already taken steps to ensure compliance with the Consumer Duty, the BNPL market may be less prepared for the changes on the horizon.

CMA takes further action to protect leaseholders

At a time when all eyes are trained on the housing market, the Competition and Markets Authority (CMA) has continued to act decisively to help leaseholders. The latest development is that thousands of leaseholders who paid a doubled ground rent will receive refunds and that nine more companies will remove such terms from leasehold contracts. The regulator has also stated that many of those who paid a doubled rent will receive a refund – the move could impact over 5,000 households across the country. Crucially, the CMA’s action has been influenced by the view that these terms result in people being stuck in homes they cannot sell or mortgage – an issue that we believe could be exacerbated over the next few years, as homeowners currently on fixed rate mortgages look to re-mortgage.

Arguably, the most striking decision that the CMA has taken is to ensure the removal of contract terms which were originally doubling clauses but were converted so the ground rent increased in accordance with the Retail Price Index (RPI). However, when one considers the context in which the decision was made, the reasoning that underpins it becomes clear. The FCA is not the only regulatory body that has felt compelled to intervene more frequently to protect consumers; CMA decisions have also been trending in the same direction. The CMA’s multiple interventions, during the pandemic, on behalf of consumers purchasing airline tickets and holiday packages that would eventually be cancelled, is clear evidence of an emboldened regulator.

Once the CMA took the view that the doubling clauses were unfair to leaseholders, it was inevitable that the body would rule that all those effected will see ground rents remain at the original amount when the property was first sold. Notably, this amount will not increase over time and the freeholders involved have also agreed to refund residential leaseholders who had already paid out under doubled ground rent terms.

We do not expect the CMA to relent on the issue, given that its investigation into the leasehold sector, began in June 2019, and now spans three governments. There’s remains a significant amount of political will, amongst MPs and campaign groups, to see whether (or the extent to which) there have been breaches of consumer protection law. As the investigation has at this juncture, identified the escalation of ground rents, potentially harmful sales practices, excessive service / permission charges and a lack of checks and balances as key issues to address, it is unlikely that the CMA will face any political pressure to wind down its activities.

The Pensions Regulator addresses refinancing in the current economic climate

The Pensions Regulator (TPR) has also given thought to the impact of the UK economic woes. The regulator has also set out its expectations of pension trustees and sponsoring employers when refinancing, imploring relevant parties to take stock of the worsening economic climate. David Fairs, the Executive Director of Regulatory Policy, Analysis and Advice at TPR, has stated the new macroeconomic challenges that country could face in the coming months may make refinancing even more challenging for sponsoring employers, as many organisations look to recover from the pandemic.

After the disruption of the pandemic, the gradual return to a more familiar business environment was always likely to result in the return of refinancing in a more traditional sense. However, the growing economic uncertainty in recent months, has led TPR to list several things that employers and trustees should consider, as they could have a tangible effect on the employer covenant. These include interest costs and fees, as changes in the cost of debt could impact an employer’s ability to meet pension contributions and debt structure, with the regulator noting that trustees should command a good understanding of any impact of replacing one type of debt with another.

Additionally, trustees are expected to consider financial covenants – typically measures of company financial performance that, once breached, allow debt holders to act, such as calling in their debt, charging a fee, taking security or otherwise make commercial improvements to their terms. TPR believes that changes to such covenants could represent a power shift between trustees and lenders in the event of financial stress.

In truth, trustees and employers will already be aware of these issues, however, TPR is likely to continue to voice its concerns this autumn. Despite the resilience one can find in certain markets – such as asset-backed lending – TPR has noted that credit conditions are tightening and larger refinancings have become more challenging, having been impacted by lender concerns around certain sectors and ensuring adequate returns on their investment.

The regulator has taken the view that these conditions are likely to be reflected in higher interest rates and tighter covenants, with potentially more onerous security requirements and greater restrictions on use of funds. An important counterpoint, however, is TPR’s admission that the rise of alternative lenders, including hedge funds and private equity, alongside newer retail banks or ‘challenger banks’, may help to ensure that liquidity remains available to sponsoring employers.

Ultimately, TPR’s key desire is for sponsoring employers and trustees to understand the implications of any refinancing on pension schemes and the employer covenant, and to go reasonable lengths to mitigate any damage that may be caused by refinancing – again, this should not be a surprise. The reality is that TPR’s messaging is similar to the other regulators that we have already mentioned. As the ‘cost of living’ bites and the Government attempts to enact its reforms, the intentions and context underpinning decisions made by organisations may become less relevant. Instead, the FCA, CMA and TPR are likely to focus on the material impact of any decision made by an organisation on individuals.