The Treasury has warned an independent Scotland could see adviser firms operating across the UK facing increased regulatory costs and would require them to be authorised with two separate regulators.
The Treasury published its latest report into the impact of Scottish independence this week, focusing on the implications for financial services and banking.
It argues that if Scotland becomes an independent state it would require a separate financial services regulator accountable to the Scottish government, rather than the UK Government.
This is because the failure of financial services regulation can have a severe impact on the wider economy.
The Treasury says firms in Scotland but 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, to the Financial Conduct Authority levy.
The Treasury also says a separate Scottish regulator would 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 that 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.”
Philip J Milton & Company managing director Philip Milton says: “If Scotland votes for independence, it will be a sad day. It will certainly create some interesting implications for any adviser operating on a cross-border basis.”