Scotland would ditch the Financial Conduct Authority and set up its own conduct regulator if its citizens vote in favour of independence next year.
The Scottish government has today published a white paper setting out the implications of a “yes” vote in September 2014.
It says an independent Scotland would look to retain sterling as a currency, with the Bank of England continuing to monitor the UK financial system as a whole.
A new Scottish financial conduct regulator would assume the key responsibilities of the FCA and would look to align its rules “to retain a broadly integrated market across the Sterling Area”.
An independent Scotland would also set up its own Financial Ombudsman Service and Money Advice Service, as well as establishing its own Pensions Regulator.
“Much of this landscape is fragmented at the moment, and there is significant scope to deliver this more efficiently in an independent Scotland offering a real opportunity to deliver better outcomes for consumers,” the paper says.
It says its own financial compensation scheme would continue to be funded by an industry levy with a Scottish government seeing ”merit” in a jointly operated and co-ordinated scheme across the Sterling Area for “key aspects of compensation”.
The paper says the new regulator would work on a “closely harmonised basis” with UK regulators, including the application of single rulebooks and supervisory handbooks.
It says: “For the first aspect of financial regulation – financial stability – in light of reforms to improve the resilience of the global financial sector, the clear trend toward cross-border co-ordination and with significant financial firms operating across Scotland and the UK, financial stability policy will be conducted on a consistent basis across the sterling area.
“The second aspect of financial regulation covers the monitoring of conduct and behaviour of firms in local markets, to ensure that financial markets function well, with choice and competition, whilst protecting consumers.
“It is proposed that this aspect of financial regulation will be discharged by a Scottish regulator which will assume the key responsibilities of the UK Financial Conduct Authority in Scotland.”