To make the UK public markets “match fit” the UK pensions industry needs a cultural shift alongside the current regulatory changes, according to city minister Ben Afolami.

Over the past year, the UK pensions industry has been flooded with a number of regulatory changes, from the Edinburgh reforms to the Mansion House reforms.

According to Afolami, who was appointed city minister during Rishi Sunak’s cabinet reshuffle in November, these reforms would “address some of the friction points that have developed over the last 10 to 20 years”.

But cultural change is needed alongside legal, regulatory and governance reforms to make UK public markets “match fit” again, he said during an investor press summit yesterday.

Afolami said there was no point in “having such a negative outlook” that “force[s] everybody to try and take away risk” in every “conceivable instance” because “a really safe graveyard” will form.

He added that while a “really safe graveyard” means nothing goes wrong it also means nothing happens.

“It’s not just for government, it’s not just for regulators – it’s for journalists, it’s for investors, it’s for fund managers, it’s for all chief executive officers of public companies to say ‘we are backing Britain, we know this is a fantastic place to grow your business, launch a business or scale a business, and we’re going to take risks’,” he explained.

“If we can do that together, then overall we’ll become more prosperous, and these reforms will take effect,” Afolami added.

He stressed that if the reforms are implemented with no cultural change, then the reforms won’t work, adding that cultural change is needed to help promote growth and competitiveness in the market.

“We all know the story – a company launched here, with great talent, great people, great culture. They get to a certain size and then people say ‘they should probably go to the US to get that scale’.

“We need that here. That’s why we’re doing the reforms, that’s why we want more pension fund money, that’s why we’re removing friction points, and that’s why I’m trying to change the culture,” Afolami said.

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