The City View: Innovate Finance summit roundup, and two Lidl adverts banned
Today Andy Silvester chats to City A.M. reporter Charlie Conchie, and whistles through the main headlines you need to know.
Andy and Charlie go through this week’s fintech Innovate Finance summit — they discuss the London Stock Exchange CEO’s comments yesterday on bosses needing a pay boost; Ron Kalifa’s views on the mindset shift needed by investors to be willing to back long-term growth opportunities; the Klarna CEO’s perspective on the UK’s approach to financial regulation post-Brexit; and the political push on crypto.
And in the headlines, the boss of crowdfunding platform Seedrs has hit out at regulators, claiming that they’re stifling growth; the Bank of England is expected to hike interest rates four more times this year, the fastest pace since 1988; and two of Lidl’s adverts have been banned.
Episode transcript (auto-generated)
Andy Silvester 0:08 Good afternoon and welcome to the City View podcast with me Andy Silvester editor here at City A.M. — in a minute I’ll be joined by Charlie Conchie, our FinTech and VC and private equity reporter. We’ll go through some of the big stories out of the Innovate Finance Global Summit held earlier this week at the Guildhall marks the high point of London FinTech week and event growing in its importance alongside the importance of FinTech to the wider London economy. Firstly, the corporate and economic headlines and the boss of crowdfunding firms Seedrs, has hit our UK regulators, so they’re claiming they’re stifling the potential of UK startups after the firm’s merger with a competitor was blocked last year. Jeff Kelisky said the Competition and Markets Authority and the underlying policy from government also hampering the potential of growth firms to set up bigger businesses. As a result of choking off a stream of companies who might want to scale up in the UK. Kelisky told City A.M. that their active policies to block acquisitions by the big companies are pretty small technology companies. Meanwhile, the Bank of England is expected to hike interest rates at the quickest pace since 1988. This year. The year Wimbledon won the FA Cup Final beating Liverpool one nil if anybody’s particularly fussed about that. I think that might just be me. Threadneedle Street or lift borrowing costs for only four more times this year take into account the total number of hikes to six. According to forecasts on investment banking giant JP Morgan, the bank shift in policy stands in stark contrast to last year’s agenda, when it kept rates at a record low 0.1% for around a year and a half despite inflation beginning to take off in the middle and back end of 2021. Rates were kept at record lows to support the UK economy through the economic shock delivered by the COVID-19 crisis and the accompanying restrictions on Brits daily and spending lives. rates will settle at 1.75% by the end of this year reckon JP Morgan and possibly hit as much as 2.5% year after. Elsewhere, Liddell has been hit with a ban for two averts author he claims shoppers could save certain amounts of money compared to Tesco following a complaint not from Tesco but from rival grocer Aldi. The advertising watchdog said the adverts which was shown north of the border in Scotland were likely to mislead consumers. One advert claimed shoppers could save more than 35% on the site is 30% in comparison to Tesco with a range of Scottish themed products. Clearly the supermarket wars continue apace, and it’s Payano back in the headlines as ever, to new developments after the rather unexpected and rather unseemly redundancy of 800 workers now about three weeks ago, the first employee has brought legal action against the company considering the chief exec said in a parliamentary hearing that he thought what he had done and what the company done had been illegal. And I can’t imagine he will be the last employee seeking to get legal redress on this front. And secondly, the company announcing so they’re hoping to get three ships back into service was announced that apparently unrelated to the crewing issues, one of the engines one of the ships was broken last week during maintenance, so the company continues to be in the headlines, probably not for the reasons it would want. And bring Charlie in now, Charlie country are sort of FinTech, VC, private equity reporter, all the cool new stuff going on in the city, our shortage reporter, if you will. Surely you were out about this week at the Innovate finance summit brings together a whole host of people from right across the world. Everything from Buy now pay later to payment companies, to VCs, hedgies whatever. Some interesting stuff coming out of it. But let’s start with one theme, which is around London’s competitiveness. And interesting comments from the boss the London Stock Exchange yesterday.
Charlie Conchie 3:43 they were indeed they were quite sort of candid in their nature, maybe a bit unexpectedly. So given the sort of FinTech audience as well. But she Julia Hoggett, chief of the London Stock Exchange was essentially calling for boss’s pay to be hiked if the city is to continue attracting kind of top firms and top talent. I think interestingly, it did come in the same week as well, in which he saw Ron Khalifa, which We revealed had written to the Treasury last month calling for a similar thing, essentially saying that bosses aren’t going to be willing to sort of shoulder the risk expected of them at top firms if the remuneration did not keep pace. So I think it’s interesting to see that there is a sort of a slight bit of mood music coming out of the city at the moment that bosses do perhaps need to be to be caps kind of well. Yeah, well, it’s off in line with in line with the level of liability they’re expected to take on. Andy Silvester 4:36 Yeah, and the risk, of course, as well, because, you know, I think we’ve talked a lot about the changes in the city potentially post Brexit and the city needing to be probably more risky, a little more willing to take those sort of longer term punts in terms of where it puts its capital. Obviously, we’ve talked about solvency to freeing up insurers and pension funds to do exactly that. And Khalifa was also talking about a mindset shift If dryer people being a bit more open to innovation, which I thought was quite interesting, Charlie Conchie 5:04 yeah. And I think that was one of the themes that you heard again and again, at Innovate finance was a, a slightly more willing kind of mindset from UK investors to back the sort of long term growth opportunities. And I think, to be fair, is something we’ve seen government try and encourage with sort of a number of years now into pensions, regulation and trying to sort of loosen the cap to allow more institutional money to flow into these these sort of growth investments. And did this the letter that went into the treasurer, again, was looking at this conservative mindset shift. And I know you mentioned cedars at the top of the top of the podcast there as well. And, again, Jeff Cholesky, was saying that there is just this government kind of sort of punishing in a way and putting this high charge on pension funds that do want to back these growth investments. And as a result, what you’re seeing is foreign funds coming in, swooping in on our exciting growth opportunities and pension savers overseas reaping the benefits of that. Andy Silvester 6:02 Yeah, absolutely. It was an interesting, interesting interview over cedars. An interesting weekend one of the firm’s that I guess we could one of the areas I guess we could look at in particular is around Buy now pay later, as its described. They were out in force at the summit. I think it’s fair. So you sat down recliner, audio video interview with the boss of afterpay, which is clear pay in the UK, the Ozzie company that was bought by square now block Jack Dorsey’s payments outfit. Some really interesting comments on regulation from the Klarna global boss. On Monday about the UK, his approach to regulation, particularly now it has left the European Union. Charlie Conchie 6:44 Yes, again, very punchy. He did a really interesting fireside chat, which I think you’ve sort of parachuted in for for about three hours, and then flew out again. But was was very sort of positive about the regulatory regime, really in the UK. And in comparison to Brussels, he said that Brussels had produced some of the worst regulation ever created, and it’s anti money laundering. And now your customer regulation is coded prescriptive. And I think said that since we have left EU, there’s been a real, you know, impetus and mindset shift to try and create a regulatory regime that sort of, you know, adopt some of the best bits of EU regulation and create some of the some new, more dynamic stuff as well. And I think you’ve seen that with, you know, the whole backdrop to innovate finance was the lever of view and the premise on that, and we saw it with the Hill review as well. Last year, there has been a push from UK regulators and the city to sort of create a new regulatory environment that does create and foster growth. Andy Silvester 7:40 Yeah, that’s certainly something we’ve heard about, I guess it’s gonna be a proof is in the pudding thing with the HiLine, Khalifa reviews, and how quickly the Treasury and various others can move on it. We should just briefly talk about the push on crypto as well. UK is going to be a home to fintechs. But it’s also apparently going to be a home to the crypto industries of the future. are politicians out and about all week saying, you know, well, open Britain was all the while the Bank of England cleaning somewhat pointlessly it seems that the area is rife with fraud? what’s your what’s your feel, I guess, on the kind of understanding of crypto the risks and opportunities at that policy, political regulatory level, or is it just this the shiny new thing? Let’s keep talking about it, because politicians like to attach themselves to shiny new things? Charlie Conchie 8:33 Well, I think maybe we could infer a bit there from the release of an NFT as an emblem of the UK support for the crypto sis ecosystem. But it was interesting, as you said that it came on the same day that the Bank of England was kind of warning on the dangers of it. But it was certainly, you know, given current movements, and there was a bit of a feeling from, you know, that regulators were sort of pushing crypto firms away. And I think they’d already seen in recent weeks at the FCA that there was a number of firms who were looking like they might withdraw from the UK. So it was certainly a sort of statement of intent that the UK is open for business to crypto, a hub, or Andy Silvester 9:15 certainly somebody thinks it’s either good or bad idea because we’re recording this looking at the window. It’s lightning, which is just struck. The 100 pips Kate building, so I guess we at least know that that’s Earth. There’s another one thunder rolling around the city of London. So very exciting. Hopefully, there’ll be equal dynamism in our, in our growing FinTech economies and the rest of London FinTech week, not won’t be quite as high as on the on the radar is that innovate finance on it, but purely the fact that it was held at the Guildhall it was able to get the people it was getting in, suggests that it is true that you’re when it comes to Europe, at least. London really is just streets ahead is the place to be, isn’t it? Charlie Conchie 9:54 Yeah, absolutely. And we’ve seen that in sort of funding figures over the last year as well. And I think John Glenn was quite keen to make the point that the, you know, the amount of capital that flowed into UK, Fintech is far exceeded its neighbours on the continent. And even as you say that the fact that there is such a sort of strong political presence, which is actually very keen to champion the sector as a sort of, you know, driving innovation in financial services. And the feeling, I think, from the fintechs themselves, and people were there was that there’d been good political engagement over last year, the Khalifah review result was formed the backdrop of the whole event and what the progress had been like over the past year. Broadly, I think the feeling was, you know, plenty done and plenty more to be done. So yeah, still likely to be a lot more political championing to come I’d imagine. Andy Silvester 10:44 Yeah, indeed. Well, it’s still nice to for once talk about good news and growing economies rather than inflation and cost of living and all sorts of things. And Charlie, thanks for joining us. That’s all from us city podcast. I’ve been Andy Silvester we’ll be back tomorrow. And then the day after that it will be our usual tech and crypto special. Have a good evening.