Scottish Independence in Finance Sector

As the Independence vote nears, many people working in the financial services industry are rightly panicking at the lack of robust detail around how our economy will survive and prosper.

Mr Salmond rightly tells that we are a “resource rich” country with oil being one of our biggest resources. That is a clear advantage to the Scottish people but two things are certain about oil:-

  1. The revenue from it fluctuates widely from year to year.
  2. It will likely run out within in the next 20 years.

An even bigger resource for our country is the Financial Services industry. Two things are certain about the industry:-

  1. The revenue is increasing year on year.
  2. The market continues to expand.

We would not dream of voting for independence without the important (but diminishing) resource of oil, but it looks as though we are happy to gamble with losing our financial services industry!

As you will have seen in the press, many of our biggest Scottish companies have confirmed that they will transfer their registration to England. Why would they do this? There are many reasons:-

  1. They will continue to be regulated as they are now in a country where 90% of their customers live. Staying in Scotland would mean they would need 2 Regulators which will increase costs.
  2. They will be sure what currency they will be using.
  3. They will have the comfort of knowing that the Bank of England will act as lender of last resort.

If/when these companies do leave how do we make up for the shortfall in Government revenues?

Four ways:-

  1. Borrow more (at a higher cost that we can get from within the Union).
  2. Huge and continuing increase in economic growth.
  3. Huge increase in taxes.
  4. Huge cuts in public expenditure                .

Like to take a bet on the most likely options?

For Scottish companies in the financial services industry, we’re left to question what will happen politically, economically and socially if an Independent Scotland is left to operate “internationally”. Would the rest of the UK want to work with Scottish businesses in the financial services sector? What compliance issues would Scottish and UK based companies face? Would there be a Scottish Financial Conduct Authority (SFCA) and would companies be required to be authorised by both the SFCA and FCA to conduct financial services across Scotland and the rest of the UK?

What about the impact on the consumer?

Most people in this country who want to buy a house need a Mortgage. In Scotland, our Brokers can currently supply our customers with a wide choice of products from all over the UK. Faced with having a 2nd Regulator in a small market (less than 9% of most Lenders business), I can see mortgage providers pulling out of the Scottish market. That would mean it would be harder for clients to get the home of their dreams.


There is muted talk that Scotland may enter the EU, if accepted, and in turn could use the Euro as our currency. The single market currency has been problematic for countries like Greece, Spain and closer to home, the Republic of Ireland. House prices in the Republic boomed and then crashed, leaving a large percentage of people in negative equity and struggling to repay their over-inflated mortgage. The mortgage market could follow a similar pattern over time and should be considered as a realistic possibility in an independent Scotland.

The currency of a country impacts on the future of its people and with no certainties we’re taking a financial gamble which could impact on millions.


Employment is vital for Scotland to thrive and with many financial services firms operating across the whole of the UK, it’s likely an independent Scotland could face job cuts in the financial services sector.

The increased costs associated with a potential compliance headache could limit the ability of companies to offer a UK and Scotland wide service, reducing their market size. Major pensions and banking establishments based in Scotland have said they will move their head office to England if Scotland votes for independence, so it’s undoubtedly going to have an impact on jobs. Both BP and Shell have said Scotland is a less attractive proposition if we are Independent from the UK.Employment in Scotland is not guaranteed to decline should we break away from the rest of the UK, however with so many important questions unanswered these become realistic fears Scottish residents must consider before making their saltire on their ballot paper on the 18th September.

I am as romantic as the next person when it comes to Independence but until the Yes camp make a financial case for it then the risk is far too great.


Eddie Chisholm


The ER Network Ltd