Treasury claims on independence ‘don’t quite add-up’ says financial expert


   By Martin Kelly

The conclusions reached by the UK Treasury on the effects of independence on Scotland’s financial sector “don’t quite add-up” a leading financial expert has claimed.

Rod MacLeod, a leading financial and banking expert and Partner at Tods Murray Solicitors, has claimed a report issued on behalf of the UK government “fails to appreciate the true nature of banking regulation”.

In an article on the company website, Mr MacLeod said that there already existed differences across the UK and that independence would result in very little change to current regulation.

“Whilst I agree with many of the findings of the report, in particular the general observation that there is safety in numbers when it comes to consumer protection schemes such as the Financial Services Compensation Scheme, some of the conclusions in the report on financial services regulation don’t quite add-up.

“The UK banking industry is used to operating in and complying with different regulatory regimes across multiple jurisdictions.  Domestically, Scotland operates its own legal system and whilst many areas of financial services regulation apply UK-wide, there is some regulatory divergence in England, Wales, Scotland and Northern Ireland which the financial services sector already has to comply with.”

The leading financial expert’s comments follow a report issued by Westminster that said independence would leave Scotland’s financial sector vulnerable and savings would be at risk.

However, Mr MacLeod said that the current regulatory system had been overhauled as a result of the recent financial crisis and that sheer necessity would mean that the system that currently prevails would be adopted in an independent Scotland.

Addressing claims that costs would rise in an independent Scotland, he added: “What the report fails to mention is that current compliance costs are already high across the UK due to constant re-vamping of UK financial services regulation from the government of the day.

“For example, oversight of financial services regulation was only recently transferred in April to the Bank of England from the old tripartite system of the Bank of England, the Treasury and the Financial Services Authority, therefore it’s a bit rich to suggest that there will be additional costs under a new Scottish system – of course there will be additional costs but glass houses, little boys and stones spring to mind.”

Mr MacLeod added that whilst divergence over the longer term were valid, that it was in the best interests of both Scotland and the other parts of the current UK to co-operate given the interconnectedness that currently exists within the banking and financial services industry.

The comments from the Partner at Tods Murray followed a speech given this week by the Deputy Governor of the Bank of England Paul Tucker who outlined the benefits of cross-border co-operation in the area of financial regulation.

Arguing that such resolution was essential to address the flawed belief that some institutions were ‘too big to fail’, Mr Tucker said: “…if you believe in an international financial system that is not only free but also safe, in shielding taxpayers from the risks in banking, and in shielding banking from politics, you will be committed to making a success of resolution”.