Chancellor Rachel Reeves is set to launch a new “skills compact” that will commit firms such as Barclays, Lloyds, and the London Stock Exchange to retrain staff for the rise of artificial intelligence. The initiative, supported by the Treasury and the Financial Services Skills Commission, involves firms developing three-year plans to certify employees in critical technologies, including AI, to prevent mass job displacement.
The Mechanics of the Financial Services Skills Compact
The compact introduces a shift in how City firms approach workforce development. According to the Financial Services Skills Commission, participating companies must report progress annually to the Treasury. Each firm is required to have at least one senior executive oversee internal training programs, ensuring accountability at the highest level.
Firms are currently drafting three-year roadmaps. By the November reporting deadline, these organizations must identify up to five essential skills for their specific workforce. At least one of these must be AI-related. Training is strictly defined: it must occur during working hours and utilize professional courses, qualifications, certificates or digital learning. Notably, firms cannot count graduates or apprentices within their training targets.
The Financial Services Skills Commission, led by CEO Claire Tunley, describes this as the most notable sector-wide skills strategy deployed since the construction industry launched its training board in the 1960s.
Addressing the AI Automation Threat
The urgency behind the compact stems from significant shifts in employment stability. Research from Morgan Stanley previously estimated that AI could put more than 200,000 European banking roles at risk by 2030—roughly 10% of industry roles across the continent. Back-office processing and oversight roles are considered particularly vulnerable to automation.
Some firms have already begun reducing headcount. In May, Standard Chartered announced 7,000 job cuts. CEO Bill Winters faced criticism after describing the move as “replacing, in some cases, lower-value human capital.” Despite these cuts, Standard Chartered is a founding signatory of the new compact, signaling a pivot toward upskilling the remaining workforce rather than relying solely on attrition.
Comparing Workforce Strategies: Past vs. Present
Historically, skills gaps in the City were addressed through reactive hiring or piecemeal training. The current strategy marks a departure toward proactive, standardized, and transparent reporting. The following table highlights the shift in approach:
| Feature | Traditional Approach | New Skills Compact |
|---|---|---|
| Accountability | Internal/Ad-hoc | Treasury-monitored |
| Training Scope | Optional/Flexible | Mandatory during hours |
| Key Focus | General Growth | AI and Digital Skills |
For employees in the financial sector, focus on obtaining certifications that are vendor-neutral or industry-recognized, as these are more likely to align with the new three-year firm-wide training plans.
Frequently Asked Questions
Which firms are participating in the compact?
Initial signatories include Barclays, Lloyds, the London Stock Exchange, Nationwide, Fidelity, Standard Chartered, Yorkshire building society, Lloyd’s of London, and Zopa.
Does this apply to all financial workers?
No. The commitments under this compact specifically cover UK-based workers only.
Why is the government involved in private sector training?
The financial sector is an important part of the government’s industrial strategy. By committing to upskilling, the government aims to maintain national competitiveness and prevent mass redundancies caused by technological disruption.
What happens if a firm fails to meet its targets?
Firms are required to report their progress annually to the Treasury and the Financial Services Skills Commission. While the compact is a commitment rather than a strict legal statute, the oversight mechanism ensures that firm-level executive accountability is maintained.
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