Scottish asset managers should be “very frightened” if the nation gains independence, experts have warned, as they may lose the right to distribute their funds to the rest of the UK.
It is likely Scotland would have to apply for EU membership following independence, with no guarantees that entry would be possible.
In the meantime it would lose access to the passporting element of Europe’s Markets in Financial Instruments Directive (Mifid), through which funds can be sold easily into EU nations including Scotland’s main markets of England, Wales and Northern Ireland.
Richard Hobbs, regulatory counsel at Lansons, said the Scottish financial services industry would be “gone” if the nation became independent without EU membership.
“Scotland can just flounce off or it can negotiate membership of the EEA [European Economic Area] and EU first and then secede,” he said.
“If it does the former, it can be done quickly but with great damage, and if it does the latter it could take years.”
Mr Hobbs said a company like Scottish Widows had roughly 96 per cent of its customers in England, meaning firms would likely cross the border.
“The moment Scotland leaves the EU they will lose the freedom of passage for their goods. They don’t seem to have noticed that,” he added.
He said: “If I was an asset manager in Scotland I would be very frightened.”
At the time of going to press, this week’s independence vote looked to be on a knife edge after a YouGov poll had put the campaign against independence marginally ahead at 52 per cent versus 48 per cent of ‘Yes’ voters. A Guardian/ICM poll put the ‘No’ vote at 51 against 49 for ‘Yes’.
Mr Hobbs’ comments come as Standard Life said it had made contingency plans to move its headquarters to the UK, a decision echoed by some of the country’s largest banks, including RBS and Lloyds.
Owen Kelly, chief executive of Scottish Financial Enterprise that represents the country’s financial services industry, said it would be true to say “all of our members will be doing some contingency planning to a greater or lesser degree” depending on each company’s customer base.
He added the financial services industry in Scotland would “inevitably” be disrupted if Scotland found itself outside the EU.
“It seems to be the Scottish government’s position that if there is not a currency union it will repudiate its share of the national debt. If that happens there will be a dispute with the UK and we don’t know how long that will last or what the consequences will be.
“But if you are negotiating EU membership and you are in dispute with another member state the timetable starts to lengthen.”
