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Independent Scotland poses questions across UK financial services

Edinburgh Scotland Sunset City 480

Hopes that a single UK financial services industry could exist if Scotland becomes independent from the rest of the UK have been called into question by the Scottish Financial Enterprise.

SNP leader Alex Salmond is due to publish his Independence White Paper, outlining prospects for businesses and macroeconomics, ahead of the referendum in 2014.

The SFE is the privately owned representative body for financial services in Scotland. In what he calls an “industry observer’s perspective”, SFE chief executive Owen Kelly highlights the core issues of the case for independence for the single market of UK financial services.

At this stage, any questions raised can only be observations as the SNP’s ‘Yes’ campaign unfolds, but Kelly points out some of arguments for independence that already implicate a distinct impact for financial services.

Kelly highlights that some of the pro-independence campaign’s proposals to preserve parts of the single market for UK financial services clash with EU regulations.

The pro-independence campaign has put forward the idea that an independent Scotland could remain with the same financial regulator as the rest of the UK. However, Kelly points out that this does not fit with EU regulations stating that each member state must have its own distinct regulatory jurisdiction.

Kelly also questions the mutual benefit of maintaining this single market for both Scotland and the rest of the UK. He says: “There is no obvious benefit to the rest of the UK in bearing the risks and liabilities of regulating the industry of another member state.

“It seems unlikely that the Parliament in a newly independent Scotland would want to demit a function of government as important as financial regulation to the legislature of another country.”

Kelly goes on to argue that it is difficult to find an argument for a unique regulatory framework in Scotland from the facts presented by pro-independence plans.

He says: “The facts we can ascertain now about the regulatory framework suggest it would be difficult to negotiate some sort of unique arrangement for Scotland (and, by extension, the rest of the UK), when Scotland is one of the EU’s leading financial centres and London is the largest financial centre in the world.”

Elsewhere, the Confederation of British Industry in Scotland has published its own paper ‘The Scottish Government’s Independence White Paper – issues that business would like it to address’.

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. This is non-question – it isn’t going to happen!

    But what Scotland wants is to be independent, but only when it suits them. We want to have a separate government, but we want to keep the pound and we want to be independent but we want to keep the same regulators and presumably the Scots are happy to continue having Scottish MP’s in London deciding what is good for England but they dont want any English MP’s in their government telling them what is good for the UK!!!

    Sorry Scotland you cant have it both ways and until Mr Salmon works out what the true cost of independence actually is it isn’t going to happen and you cant answer all these questions with a simple yes or no.

  2. An independent Scotland with an accountable financial regulator, could end up as the place to do business.
    Now that would be a reason for Scots to vote YES.

  3. Quote from above: “It seems unlikely that the Parliament in a newly independent Scotland would want to demit a function of government as important as financial regulation to the legislature of another country.”

    What if … we widen, transpose and compare?

    “It seems unlikely that the Parliament in the UK would want to demit a function of government as important as financial regulation to the legislature of the EU.”

    It seems unlikely things do indeed happen!

  4. If Scotland, NI and Wales vote for independence they would then neeed to apply to join the EU.

    If they aren’t in the EU firms would not be able to take advantage of cross border services.

    Having said that, Ireland did fairly well out of having its own financial district and regulatory regime so why can’t other regions of the British Isles do something similar? Regulation London style has done nothing for the devolved areas, it can’t see anything outside the ‘City’.

  5. I cannot comprehend how Scotland (for better or worse) could have anything other than a completely seperate system,

    This make work well for them in the good times, although how they might cope with another RBS in the future might be an interesting question….

  6. All the available evidence, whether from the UK, the EU, or the USA, would suggest that the location of the regulator has had little significant effect in preventing financial crises.

    The over-riding criteria for a regulator is not its residence, but its competence.

  7. Quite right Mike
    Scotland should self regulate.
    Things would not be any worse and may in fact be an improvement.
    Freedom!

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