The Treasury’s 113-page paper, Scotland Analysis: Financial Services and Banking, said the country’s financial services sector was “highly concentrated” and dominated by the Bank of Scotland and Royal Bank of Scotland.
It claimed that Scotland would need to create its own regulators and consumer protection schemes, such as the Financial Services Compensation Scheme and pension protection funds, but could have “significant” difficulties in funding them as it would need to impose levies on a much smaller industry.
Financial services make up more than 8 per cent of Scottish onshore economic activity, employing almost 200,000 people, and the paper said the banking sector would be “exceptionally large compared to the size of an independent Scotland’s economy”, making it more vulnerable to financial shocks than if it were part of the UK economy.
In the event of a default of one of the banks, the report said “almost all of the costs for compensating depositors would fall on the remaining large firm”, potentially crippling the economy.
Industry View
Adrian Grace, chief executive of Aegon UK, said: “Aegon is based in Scotland but we employ staff and, most importantly, serve customers in all parts of the UK. This report highlights a number of the issues on which we need urgently to gain clarity.”
Adviser View
Craig Richardson, IFA for Glasgow-based Killermont Investments, said: “I was under the impression that there would be some sort of allowance regarding passporting for advice under the MiFID rules but as for the banking sector and regulatory requirements, this only muddies the waters even further, for both advisers and consumers, in an already disheveled sector.”
