View more on these topics

Treasury report: Independent Scotland could see advisers’ regulatory costs soar

Scotland-Flag-Scottish-700x450.jpg

The Treasury has warned an independent Scotland would need a separate regulatory regime which could push up costs for firms and create an additional compliance burden.

The Treasury has today published a report into the impact an independent Scotland would have on financial services and banking, as part of a series of analysis papers on what would happen if Scotland separated from the rest of the UK.

In the paper the Treasury points out if Scotland became an independent state it would require a separate regulator accountable to the Government.

It says regardless of whether Scotland introduced a whole new regulatory system or separate conduct regulators, firms operating across the UK would have to pay two lots of regulatory costs, and passport between the two regulatory systems.

Scottish firms currently contribute around 18 per cent, or £83m, of the Financial Conduct Authority levy.

The Treasury also says a separate Scottish regulator would also mean more onerous authorisation requirements for firms and advisers working across both jurisdictions.

It says: “There would need to be separate regulatory regimes in Scotland and the UK, and it is inevitable over time there would be divergence.

“If such divergence took place, not only would firms operating across both jurisdictions need to be separately authorised, each approved person, such as an IFA, working for the firm would need the approval of both regulators; and would also need to comply with separate requirements imposed by each regulator.”

Different tax treatment could also prove problematic, as products such as cash Isas and investment trusts grant tax relief to UK residents. The Treasury says although Scotland and the UK may be able to come to an agreement to waive tax on certain products, this would create “significant additional complexity” for consumers and firms.

The Treasury also argues an independent Scotland would have difficulty in replicating the Financial Services Compensation Scheme, as its scheme would cover fewer firms. It would also be dominated by Royal Bank of Scotland and Lloyds Banking Group, and if one of those banks were to collapse the Treasury believes a scheme similar to the FSCS under an independent Scotland would struggle to compensate savers.

Recommended

1

Treasury: Scottish independence would create DB pension problems

The Treasury says defined benefit pension schemes will face “substantial additional burdens” if Scottish citizens vote in favour of independence next year. A report published by the Treasury this week warns DB schemes which are currently provided cross-border between England and Scotland would face significant difficulties if Scotland becomes independent because EU regulations would require […]

Friends Life corporate sales hit as rivals slash auto-enrolment prices

Resolution chief executive Andy Briggs says Friends Life’s corporate business suffered during 2012 as rivals slashed prices to “unprofitable” levels in order to win automatic enrolment business. Last week Resolution, the parent company of Friends Life, reported an 18 per cent drop in UK sales in the first quarter, from £173m last year to £142m […]

Campbell Macpherson teams up with What If

Consultancy firm Campbell Macpherson & Associates has teamed up with innovation consultancy firm What If to try and aid financial services firms in developing new products and attracting new clients. The two businesses say they will look to provide services to platforms and life companies in order to help them reduce costs, attract new business, […]

Newton hires high yield analyst for global fixed income team

Newton has appointed Cairn Capital senior credit analyst Khuram Sharih as a high yield analyst in its global fixed income team. Sharih will report to Parmeshwar Chadha, the lead manager for over £1bn of assets under management in high yield bond positions, and is responsible for analysing global high yield investment opportunities aligned to Newton’s thematic […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. RegulatorSaurusRex 20th May 2013 at 1:38 pm

    Totally unfounded scare story.

  2. That assumes, of course that Scotland decides to have a regulatory body and FSCS scheme at all. It will be an independent country and could say “stuff it” we are not going to bother. Alternatively they could come up with their own one whcih could be a fraction of the size, complexity and cost of the abomination we have in the UK. In fact they could even have a small affordable one that actually does what will be good for the industry, clients and even advisers that works for everyone’s benefit not just the regulators benefit. Now that would be novel wouldnt it? Just because the UK has this ungodly thing does not mean that Scotland has to follow suit. Only civil serveants could think it would need to have the same thing as we do if they independent. I say go for it.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com