I am pleased to see the FCA promoting risk-taking as part of a growth culture in investment.  This from the FT report.

Speaking at the Global Management Summit 2025, Simon Walls, executive director of markets at the FCA, explained how the regulator was encouraging people to take more risk.

He explained measures to support growth may come with some risks.

“The spirit of risk-taking lives on, and at the FCA, we want to play our part in making sure it flourishes,” he said.

“Depending where you get your news, it may sound strange to hear a regulator extol the virtues of risk.

“So let me say it loud and clear: Risk is good. In much of financial markets, risk is the point.”

Walls said risk drives innovation, finances infrastructure and supports employment.

“And ultimately, through your decisions, it improves lives for the people you invest for,” he said.

“As the host of a global wholesale market, growth has always been one of our success measures. It tightens spreads and supports capital formation.”

I am happy to see this at the FCA and sorry not to see the same approach to growth in other regulators. I hope that we will see change at the Pensions Regulator, its CEO is FCA born and bred and Julian Lynes has been drafted in for a year to Market Oversight and the TPR executive. We need pensions to take risk onboard, whether DC (obvious) or DB (less obvious but clear to those offering capital to back pensions to invest for the future).

Michael Mainelli -before the Bank of England.

Michael Mainelli  the British/American economist was speaking at the DCIF event yesterday afternoon. I was sitting listening beside Con Keating who had  helped in drafting  the speech. I am hoping to publish sections of what he said so will not spoil the party.

Like Simon Walls, he pulled no punches in the need for pension schemes (including what he called “the great lie DC pensions“) need to make better use of risk to grow. He has earned his place in the photo as a man of the City of London, having followed Nick Lyons as Mayor of our City. As importantly, he continues to promote the taking of risk to achieve growth as does Con Keating, who I hope to quote more of!

There is sadly a view that fiduciary duty among Trustees is to take no risk or at least “de-risk” to the point where the only people to get the benefit of DB pensions are those granted DB pensions in years now distant. The “Pensions Security Alliance” , a lobby group of insurers is promoting insuring away any chance of growth in exchange for security for the few who have private DB pension promises. Meanwhile Britain is starved of capital to grow.

We cannot go on as seem destined to do, talking growth but regulating for lockdown. The FCA has come out with a clear statement that taking risk is worth doing – with expertise and responsibility. The Pension Regulator’s approach is to threaten trustees with jail for doing so. This excellent report from Gill Wadsworth of the irrepressible John Hamilton makes the point better than I can.

John Hamilton, Trustee and Group Pensions Director at Stagecoach Group Pension Scheme, said of the total GBP1.4 trillion of assets held by DB schemes, just GBP160 billion to GBP170 billion are held in equities.

“The amount we invest in growth assets is not enough. We need a change in mindset to grow pensions; having a surplus and growing that surplus is a good thing,” Hamilton said.

According to the government, approximately 75 per cent of DB schemes are in surplus, worth GBP160 billion.

Hamilton says trustees should be encouraged to grow such surpluses, but points to existing legislation and regulation which disincentivise trustees from investing in productive assets.

The 2024 DB Funding Code, overseen by The Pensions Regulator (TPR), moves DB schemes towards a funding model which makes them less reliant on their sponsoring employer as they mature.

This drives DB schemes to favour an asset liability matching investment strategy which typically means investing in gilts and corporate credit.

And while the code does not preclude investing in growth assets it requires schemes to demonstrate how these assets fit within their overall funding and investment strategy.

Meanwhile, Section 58B of the Pensions Act 2004 makes it a criminal offence “if a person acts or engages in a course of conduct that detrimentally affects in a material way the likelihood of accrued scheme benefits being received (whether or not the benefits are to be received under the scheme)”.

Hamilton said: “We need to change legislation and regulation, which was drafted when circumstances were very different from today and which does not reflect the current DB situation. Trustees need to have a framework that allows them to invest with confidence in growth assets.”

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The other side of the coin

Meanwhile the insurers continue to peddle panic messages through the conservative press

Having read Simon Walls of the FCA and listened to former Lord Mayor of London, Mainelli, I am wondering if the Pension Security Alliance isn’t the wrong side of regulation.