This week has been dominated by the looming possibility of a break up between Scotland and rest of the UK, with the consequences of a ‘yes’ vote being countenanced across the financial press after a shock poll for the Sunday Times gave the independence campaign its first marginal lead.
Financial fears have been mounting as the possibility of a ‘yes’ vote comes into focus. Ultimately the question is, to borrow an oft-cited metaphor from a lively comment thread on FTAdviser last week: how messy would the divorce be?
Very, if the plans being drawn up by financial services firm, among others, are taken at face value.
As the week wore on one firm after another made it publicly known that they have a contingency plan in place should the independence vote win out - that plan being to relocate head offices to England.
Scottish giant RBS kicked off a wave of announcements, followed by Lloyds Banking Group and, later in the day, Clydesdale Bank. Standard Life and Aegon similarly stated they would set up English life companies and move assets, with a full headquarters move also on the table.
The future flood of Scottish-based institutions to England perhaps betrays a loyalty which some would not like to admit is not real. Or at least, it betrays a loyalty to an economic reality which nationalists firmly reject.
Alex Salmond for example, has dismissed the talk as simply being to do with the moving of ‘brass plaques’, taking at face value the statements from banks that they do not yet involve any intention to move jobs, and engaging in some bluster about Treasury leaks to the BBC.
But the economic naysaying is not just coming from pro-Union financial services firms north of the border. Also this week, Credit Suisse economists predicted Scotland would slump into a “deep recession” if it secedes from the UK.
Such predictions, coupled with fears over the currency among other issues, has persuaded many to start pulling money out of Scotland, with a report this afternoon revealing an acceleration in outflows from UK funds too.
Whatever your feelings, if you happen to have a vote, it is clear the split might be more acrimonious than the ‘Yes’ campaign has previously believed.
Other exits
Aside from arrangements that these organisations have been making should a divorce of the union occur, there have been exits elsewhere in financial services this week, including another major fund manager.
Julie Dean’s departure from Schroders left the company’s management both “shocked” and “disappointed”.
Her resignation follows recent meetings at which she reassured investors and Schroders’ senior management that she was happy with her position at the firm, according to sources.
Investors may have been confused too - Dean was there for less than a year - but maybe this is a sign that the ‘star manager’ culture we have witnessed over the last few years is simply unsustainable for its principal leads.
FCA has its say
The week hasn’t been wholly dominated by possible divorces and real exits. FTAdviser saw out its first live Q&A debate on the Mortgage Market Review which featured Lynda Blackwell, mortgages and mutuals sector manager for the FCA.
Ms Blackwell condemned mortgage lenders for over-interpreting new affordability rules and failing to apply flexibility allowed under the ‘transitional’ rules in place, saying she was disappointed “that some lenders are not approaching our rules in the spirit they were intended.”
Her response was in relation to cases where existing borrowers have been refused applications for mortgages despite borrowing not increasing.
Ms Blackwell added: “Leaving customers stuck on higher rate deals when the option exists to move them to one that costs less is not putting the customer first”.
Elsewhere the debate focused on the relaxation of buy-to-let limits ahead of the pension reforms and ‘endless’ mortgages being a thing of the future, with lenders beginning to revise maximum age requirements in light of the reforms.
Service complaints
Readers of FTAdviser were also absorbed by the Hornbuckle Mitchell story this week, where a financial adviser said he was considering taking the firm to the small claims court to try to recover close to £1,900 from an invoice it submitted to cover time it alleges was wasted due to poor service.
Mr Read told FTAdviser examples included one client who has had three commercial property transactions fall through, as well as “late payments” and unsatisfactory communication between different parties.
He cited one case where a property transaction had to be the day before it was due to be processed as the calculation for borrowing was thought to be wrong.
Later, Hornbuckle confirmed it has relaunched its property proposition and outsourced all property administration to a third party in the hope of improving standards. Advisers will be hoping so, too.
