Kalifa Review: a post-Budget progress report

4th November 2021 | Blogs

by Adam Jackson, Director of Policy, Innovate Finance

In February, Ron Kalifa published his independent review of UK FinTech, commissioned by UK Treasury ministers. Innovate Finance and the City of London Corporation provided the secretariat. The report, which saw contributions from across the FinTech ecosystem contained actions for government, regulators and for industry, focused on five key areas: policy and regulation, skills, international, national and investment. 

Implementation was always going to be a marathon not a sprint.  In the fast-paced world of technology and financial innovation, it's an evolving agenda that will never stand still. 

The Chancellor of the Exchequer’s recent Autumn 2021 Budget and Spending Review announced Government progress on a number of the review’s recommendations, building on previous announcements. So, eight months in, what progress has been made and what’s next?

Here’s our scorecard, looking at Government and regulatory responses to the Kalifa Review:

Looking in more detail:

Policy and regulation  

We saw early commitments here, with the FCA grasping the agenda set out in the Kalifa Review and taking forward the design of a scale box, developing the sandbox and a new ‘regulatory nursery’.  At Innovate Finance we have been delighted to feed into the development of the scale box and look forward to its pilot launch in the coming months.

On trade policy, in June the Department for International Trade kicked off negotiations with Singapore on a digital economy agreement, an innovative digital trade deal which should create new opportunities for FinTech.  It has the potential to serve as an indicator of how these agreements are negotiated in the future, putting innovation across financial services at the centre of such deals. At Innovate Finance we will set up a trade policy group with our members, to develop input to these and other negotiations.

On a new regulatory framework, the Bank of England kicked off work on a Central Bank Digital Currency and a consultation on stablecoin. The Department for Digital, Culture, Media and Sport has been making gradual progress on digital ID and developing the UK’s data strategy.  It was good to  see additional funding for this in the Spending Review: £50 million over the next three years for work including “a doubling of AI and data scholarships, and funding an ambitious agenda on data policy and digital identities”. We are still waiting for a government regulatory roadmap for crypto, whilst the FCA has taken some regulatory action against individual firms and extended the deadline for initial temporary crypto Anti-Money Laundering authorisations. Across Government there has been very limited progress on introducing Open Finance - extending open banking to other areas of financial services.

The main policy and regulation recommendation that has been ducked so far is for a FinTech strategy. Kalifa recommended a government task force  to join up and develop a single, cohesive strategy. UK FinTech firms face a barrage of different officials and organisations: my colleagues and I mapped the areas of live regulatory work that has significant impact on the competitiveness of UK FinTech and it is an alphabet soup of Government departments and regulators: Treasury, DCMS, BEIS, DIT, DfE, Innovate UK, British Business Bank, Home Office, CMA, ICO, FCA, PRA  and multiple teams within these.

Some issues, such as data-led innovation, for example, intertwine departments across separate projects on smart data, open finance and digital ID. 

The sheer breadth and quantity of government and regulator work affecting FinTech requires greater coordination to maximise opportunities and support competitiveness. Innovate Finance will continue to make the case for a more cohesive, joined up Government approach.

In summary:  Good progress on some individual initiatives; but still need a joined-up strategic approach and faster progress on the future regulatory framework, including crypto regulation and open finance. 


Regulators have also taken the lead on the Kalifa Review recommendations on investment and Lord Hill’s review of listings. The FCA consultation on listings reforms over the summer took the Kalifa recommendations seriously. FCA proposals on dual class shares and reducing the free float requirements have been welcomed by our members and should make the UK more attractive to founders seeing an IPO. The FCA have said they are aiming to finalise these changes by the end of the year, so IPOs in 2022 can benefit. 

Government has grasped the investment agenda as well. The Kalifa Review called for a review of the regulations around the fee cap on defined contribution pension schemes, which acts as a barrier to institutional investment in fintechs and other longer term productive assets. In the Budget, the Chancellor announced the government will consult before the end of the year on further changes to the fee cap to unlock investment. This in turn should help enable the creation of a growth fund for Fintech.  Alongside this, in September the Government announced a UAE-UK Sovereign Investment Partnership, with the UAE committing £10 billion to invest in priority sectors including FinTech.  

The Budget brought more progress on Kalifa investment recommendations, with confirmation that R&D tax credits for innovation will be extended to data and cloud computing, boosting investment in FinTech such as AI, open banking and SaaS.  Unfortunately we will have to wait until April 2023 for these to take effect. Further details are expected in the next month or so. The Chancellor also announced £160 million for the British Business Bank to co-invest with regional business angels, helping to address the  early growth funding gap.

The Budget did not take up the Kalifa Review proposals for extending the Enterprise Investment Scheme, Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trusts (VCTs) to support investment in StartUps and ScaleUps engaged in regulated financial services - action is still needed to expand eligibility to all FinTechs.

On the idea of new Fintech stock indices, I understand discussions are ongoing with a number of potential private sector providers.

Summary:  Excellent progress on listing reforms, which should be in place early in 2022 and Government is grasping the nettle of increasing institutional investment into scale ups.



The Kalifa Review call for a scale up visa was quickly backed by the Government, with an announcement by Rishi Sunak at IFGS21, Innovate Finance’s  global FinTech summit. The Home Office is developing this for launch in the spring.  

Last week’s budget reconfirmed this - and we remain on track for launch of the scale-up visa in April 2022.  The key issue to resolve in the detailed design is around what will qualify as a scale up – in particular, a mechanism is needed to allow for innovators that don’t necessarily meet a rigid growth formula.

Budget also announced a new Global Talent Network to bring highly skilled people to the UK in key science and technology sectors. This will work with UK businesses and research institutions to identify skills needs before sourcing science and tech talent from universities, innovation hubs and research institutions to bring to the UK. A ‘concierge service’, which will support these individuals in moving to the UK, will launch in prime areas for FinTech talent next year:  the Bay Area and Boston in the US, and Bengaluru in India and will expand to six countries by 2023. 

In terms of retraining and upskilling, Ron Kalifa and the Department for Education hosted a recent roundtable with the City of London and Innovate Finance members, which particularly looked at opportunities to increase awareness of Government training schemes available for FinTech firms and how we can increase uptake of apprenticeship funding (which the larger firms are paying for through the apprenticeship levy).  Here at Innovate Finance, we run the FinTech for Schools programme and there remains an opportunity to extend something like this to Further Education and universities.

Summary: the Government has listened and is acting on the need to ensure UK Fintech can access the best global talent. There remains more to do to plug FinTech into existing skills programmes and strengthen links with colleges and universities.



The Department for International Trade (DIT) launched a number of FinTech trade initiatives at IFGS 2021 in April – with a FinTech Export Academy  and Export Champions.  Government has also involved FinTech firms in a range of global investment showcases and conferences in recent months. Here at Innovate Finance we are looking at how we can help amplify and join up activities with DIT and other partners promoting UK FinTech overseas, as well as engaging our members with discussions that seek to increase the number of opportunities to scale overseas. 

Summary: the Department for International trade was quick to announce additional support for FinTech exporters and their dedicated FinTech team and overseas trade commissioners remain highly engaged in promoting opportunities. We should see more practical steps to join up private sector and Government initiatives in the coming months.


National Connectivity

The Kalifa Review emphasised the power and potential of FinTech clusters across the UK.  Members of the Fintech National Network have developed strategies for their regions and continue to support and champion the regional hubs which play such an important role in the UK ecosystem. Whilst last week’s Spending Review did not include any specific investment in FinTech clusters, it did announce additional funding in future years for regional ‘levelling up’ and for Innovate UK’s programmes - and FinTech should play an important role in these programmes, recognising the value of higher paid FinTech jobs outside London and the global competitiveness of the sector.

The Kalifa Review recommended a new Centre for Finance, Innovation and Technology (CFIT). This was backed by the Chancellor in April and we were pleased to see the Spending review announce £5 million of seed funding to set it up. A Treasury update in August indicated that this will be a virtual body, focused on supporting the UK’s national FinTech hubs; commissioning and publishing new research on the UK FinTech industry; and coordinating  industry ‘coalitions’ to look at how Fintech can collaborate to solve societal and economic challenges and shape new innovation (building on the sandbox or tech sprint approach). 

This should be a great addition to the UK FinTech ecosystem, and one we at Innovate Finance have called for as critical to strengthen national connectivity across the UK and deliver data-led insights into the sector.  As the established industry body for UK FinTech, we look forward to bringing our members’ and the wider industry’s voice to the table as we support the development and execution of CFIT to make sure it effectively serves the ecosystem and delivers on pushing the national UK innovation agenda forward.    

Summary: the regional hubs of the Fintech National Network have taken forward the national connectivity agenda. Government backing - including seed funding - for CFIT will provide welcome momentum and a focus on delivery of initiatives across the UK.


Some boxes ticked, more to do….

Ron Kalifa was very clear in his Review that industry would have to play a key role in implementing its various recommendations. It should not, and cannot be the sole responsibility of the government.

At Innovate Finance, we are taking forward recommendations on Net Zero, on trade promotion and scaling internationally, on FinTech for Schools, alongside re-skilling, and connecting investors to scaleups. The City of London Corporation is also supporting a range of activity, including industry input to the scale up visa, the latest digital sandbox and digital trade policy. Many of the industry partners involved in developing the Review continue to work on advancing this agenda.

What are the next steps as we head towards the first anniversary of the Kalifa Review in February?  Government and regulators have taken forward implementation in stages. Rather than waiting for everything to be ready in a big bang style, they sensibly decided to  crack on with individual projects. And in the meantime, the market will keep evolving and creating further priorities for action.  Over the next six months the things to look out for are:

  • Delivery:  Turning commitments and consultations into action, including set up of CFIT, scalebox and the listings reforms.
  • Continued policy and regulation focus:  coordination and cohesion across government and regulators; finding ways to ensure that every part of government and all the regulators work in the same direction and are focused on UK competitiveness and innovation.

At Innovate Finance we continue to press for the Kalifa Review recommendations and work with others to further develop the policy and regulation agenda to ensure the UK keeps up with the pace of change and remains a trusted, competitive global hub for innovation. Innovate Finance CEO, Janine Hirt, has set out how we will be progressing the Kalifa Review and our priorities for the coming year.

Above all, the Kalifa Review was a great example of what can be achieved when the whole FinTech ecosystem - including government - collaborates; and that is how we believe it should be taken forward.  Eight months in, there has been lots done; and there is still lots more to do. As well as short and medium term delivery of the Kalifa Review recommendations, we also need to keep a longer term eye on  ‘what next?’.  With constant market innovation in the market, there will always be more to do….

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