UK Sets Up 'Productive Finance' Group To Boost Investment

By Irene Madongo
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Law360, London (November 20, 2020, 3:02 PM GMT) -- Britain's top regulators and the Treasury said on Friday that they will form a working group to seek to improve investment in "productive finance," which could help revive the country's economy, which has been battered by the COVID-19 outbreak.

HM Treasury, the Bank of England and the Financial Conduct Authority want the new body, which will be made up of lenders and insurers and other finance companies, to draw up ways to overcome hurdles to investing in productive finance —  investment in long-term projects such as green technology and the infrastructure sector.

"The working group's mandate will be to agree the necessary foundations that could be implemented by firms and investment platforms, to facilitate investment in long-term assets by a wide range of investors," the FCA said.

Productive finance can produce "desirable outcomes" for investors, although they could face challenges such as having to commit for long terms, the FCA said.

The working group will be "co-sponsored" by the Economic Secretary to the Treasury John Glen; Andrew Bailey, governor of the BoE; and Nikhil Rathi, FCA chief executive.

The new group will also set out a timetable for its work and look into structures of funds for investing in long-terms assets, such as property or equipment. The group will also examine structures such as defined contribution pension funds, the FCA said.

The Treasury and the regulators said they will invite asset management companies, pension funds, wealth managers and trade bodies members to join the group.

"The economic uncertainty created by coronavirus...means that it is now more crucial than ever that a long-term investment culture is fostered that ensures good outcomes for consumers while aiding economic recovery," the FCA said.

The pandemic has shaken the British economy, prompting authorities to step in to help consumers and businesses struggling to cope. The FCA announced on Thursday that it would extend payment  breaks for borrowers in difficulty with repaying credit-card debt, motor finance and similar bills because of the pandemic.

The government also launched state-backed "bounce back" loans to help small businesses that have been affected by the virus outbreak.

--Additional reporting by Martin Croucher. Editing by Ed Harris.

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