In just two months’ time, the future of Scotland and the UK could be irrevocably changed. The referendum on Scottish independence is fast approaching but ahead of the vote on 18 September there are some serious unanswered questions on what a Yes vote would actually mean, particularly for financial services.
There are a number of unavoidable challenges when it comes to how Scottish voters assess the costs and benefits of an independent Scotland, not least the fact that the responses change depending on which side of the campaign the answers come from.
As an example, Money Marketing was given the figures of 85,000 and 185,000 when enquiring about the number of Scots employed in the financial services sector.
As it turns out, both figures are correct – based on the respective numbers employed either directly or indirectly within financial services.
An independent Scotland that is a member of the EU would have to have its own UK financial regulator and its own central bank, which clearly would create the risk of duplicating costs for providers, advisers and consumers.
There is also a bigger issue affecting advisers that has yet to be picked up on by the wider media: the impact an independent Scotland would have on the UK platform market.
Obviously, Isas and Sipps are solely products for UK investors. In the event of an independent Scotland, platforms based north of the border with UK investors will fall foul of EU cross-border rules which prevent administrators of these tax wrappers being based in a “foreign” country. Platforms may be forced to register outside an independent Scotland and move tax-sheltered investments across.
Equally, the impact of a No vote needs to be considered.
Given the momentum building behind the referendum, even a No vote is likely to mean more devolved powers to Scotland.
Political parties of all stripes have pledged greater powers for Scotland in future, particularly relating to handing Scotland more control over raising taxes.
What is interesting to note in all of this is how the over-riding uncertainty around the referendum is feeding into conversations between advisers and their clients.
Anecdotally, this is a theme that is consistently coming up – investors are asking how the Scottish referendum will affect them and whether they should take any action to avoid any negative impact on their financial plans.
Unfortunately, this is a question to which advisers are unable to provide any clear-cut answers.
Natalie Holt is editor of MoneyMarketing. Follow her on Twitter here