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Swinney bids to quell independence fears of Scotland's financial sector

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Published Date: 28 May 2008
By PETER MACMAHON
BUSINESS EDITOR
JOHN Swinney yesterday revealed that an independent Scotland could retain a UK-wide system of regulation for the financial services industry.
In words that will be seen by some as a move to assuage fears over independence, Swinney conceded there could be a case for one regulatory regime for the British Isles.

Speaking at a Global Financial Services Week event, Swinney said that continu
ing with the current regulatory regime was "one option" being studied by the Scottish National Party.

The Cabinet secretary for finance's remarks came amid continued concern at the highest levels in the financial services industry north of the Border over the prospect of independence.

Many fear that an extra tier of regulation – on top of the rules imposed by Westminster and Brussels – would create an even more costly compliance bureaucracy

But asked if there could be a unified system of regulation continued after independence, Swinney replied: "That certainly would be one of the options."

Swinney conceded that companies worried by the prospect of independence and regulation could, if they choose, opt to leave Scotland.

However, he maintained: "We would have to take decisions about the way in which financial regulation was handled as an independent country. We would take those decisions with the principles of business competitiveness very much in mind."

Swinney added: "The last thing we would want to do is to in any way undermine the competitiveness of the financial service industry in Scotland.

"Making the sector more competitive is a key aspiration of the Scottish Government and would be our aspiration in any changed constitution circumstance."

Swinney's response was welcomed by John Campbell, the chairman of Scottish Financial Enterprise, the industry's representative body.

Asked if he foresaw another tier of financial services regulations arising out of independence Campbell said: "I would hope not, full stop."

Campbell refused to be drawn into the political debate over independence but he appeared to signal that the industry's main concern was regulation.

Asked about the possibility of additional rules in Scotland, Campbell cited recent moves to introduce pan-European regulation.

He added: "You may find, as part of Europe, we end up with a single regulator anyway and this debate is not important."

Last night SNP sources explained that, alongside the idea of continuing with a British system, the party is also considering a Scottish model.

A source said that the party was looking at mirroring the regulatory regime in Ireland.

The Scottish financial sector's share of the Financial Services Authority costs were around £23 million a year but the equivalent service in Ireland costs the industry just £13m, the SNP claimed.

A separate Scottish financial services authority could operate on a similar basis to "the successful Irish model".



Page 1 of 1

  • Last Updated: 27 May 2008 8:55 PM
  • Source: The Scotsman
  • Location: Edinburgh
  • Related Topics: Scottish National Party
 
1

The Tin Man,

Over the Rainbow 28/05/2008 07:41:18
Swinney says that financial regulation might be the same, and then again, it could be different.

Dear John,....
2

observer9,

28/05/2008 08:13:46
You’ll need to do more than that.

Only Governments love borders and regulation.

Companies need more than platitudes as they exist only by being competitive.

The majority of the financial administration can easily be handled from any location(s) on the planet that the organisation chooses. The front line customer facing jobs will still be needed but require only a small percentage of the total number of administration necessary to fulfil the complete service.

Wakey wakey, get your finger out and realise we’re entering a serious phase of momentous and severe shifts in employment structure.

This applies to all levels and types of business and if we do not get to grips with encouraging the private sector and slimming down the public sector our near future is bleak.

Certainly regulators are necessary and a valuable comforting presence but that will not stop the upsurge in moving back office jobs away from the U.K. This is more than globalisation as that doesn’t come close to pointing up the drivers, it’s technology, lower taxes, equally smart and equally creative smaller/emerging countries, more enlightened governments with a long term vision and if our elected leaders don’t open their eyes and focus on the mindsets of commercial companies our prospects are dim.
3

The Strategist,

28/05/2008 09:39:03
The UK regulatory system has led to exceptionally low levels of investment in new companies.

Why would we want to maintain that system in an independent Scotland?
4

Jamiem,

28/05/2008 09:45:56
The system of regulation might not matter if the SNP persist with their 3% local income tax proposals, because at least some of the high earners in the financial industry will relocate to avoid it, and who will run these companies then?
5

The Strategist,

28/05/2008 10:07:39
#4 Surely the point is that we really only want companies that are prepared to work with the Scottish people and Govt to develop the Scottish economy. If as now they're only interested in sucking the wealth out of Scotland then why should we be concerned if any or all of these high earners relocate or indeed if the companies survive.
6

antifa,

28/05/2008 10:43:54
Mr Swinney, you might have noticed that the deregulated financial services sector has all but sent our economy into recession. It needs to change.
7

Alasdair10,

Glasgow 28/05/2008 10:45:34
I do not think its simply a question of the smartest/richest running companies as Scotland is a tremendous place to live and work. It is a question of making the conditions balance to maintain a reason to employ as many workers here as possible.

The tax situation is not conducive to attracting and sustaining business in its current form. Scotland is full of bright able people but they are not here to support governemnt and other associated agencies. The best will leave or set up offshore companies and if our leaders dont understand this we may be up the creek without a paddle very very shortly.
8

Sedov,

Scotland 28/05/2008 12:21:34
The SNP policy of trying to please everyone at once and tailoring their policies to suit the working class and bosses both at the same time reminds me very much of the thinking of Robert Owen and his New Lanark project where he appealed to the bosses better nature (!) and tried to convince them to invest in a venture ( by issuing bonds) which gave a much lower return than other investment opportunities for the capitalist. It was called "utopian socialism" and failed miserably after a long and agonosing death a bit like the Darien project. The same fate will befall the SNP and their niave dream that somehow independence will triumph over international capital finance because 'Scotland is special' Apart from a small minority , the bosses will always invest in things that will give the greatest return.
9

AF,

aberdeen 28/05/2008 14:55:36
In what meaningful sense is it "Independence" if the financial services regulations are to be set by the UK government ?

The UK Government would be able to amend the regulations without Scotland having any say, and we'd have to choose to take it or leave it.

I'm also stunned by the vague language being used in the quotes from the SNP sources - Mr Swinney says "That certainly would be one of the options"; the anonymous source says "the party is also considering" one policy, "the party was looking at " another, and the system "could" operate on a similar basis to the Irish - have these guys not thought about any of these practical issues in the seventy years they have existed ?

10

Jamiem,

28/05/2008 17:09:17
#5

If the companies don't survive there will be a lot of people in Scotland finding themselves out of a job, given our high dependency on employment in the financial industry. The initial relocation may not be of concern but I suspect the aftereffects will have much wider ranging implications for the country as a whole.

It's all very well saying we only want companies who will work with and for Scotland, but where are we going to find these, exactly? For years, companies in all industries have been coming to Scotland to take advantage of grants before disappearing again the minute the financial advantages are removed, for example, Motorola out at Livingston.

And which companies will come to Scotland and set up here if by doing so, they expose their senior management to higher personal taxes?

We need to develop our own industries again if your strategy is going to work.
11

Richard M,

Scottish Raj 28/05/2008 18:22:08
The old adage about cakes and eating them spring to mind. But if you are going to have Pan-British regulations in Finance, possibly continue a single currency, mutual defence arrangements, etc, that's not exactly independence, more federalism or confederation
12

Brianwci,

Edinburgh 20/06/2008 15:00:19
So far this SNP Government has been very much a listening Government, that's why they are riding so high in the polls.

It is also patently obvious that they are desperate to do the very best for Scotland and to make business as easy as possible, e.g. by reducing the time it takes for planning to pass or fail a project.

Salmond is an eonomist, Swinney former banker, I think it's safe enough to say that they of all people know the importance of the Scottish finance sector and that they will do everything in their power to make that sector more competitive.

We must expect a thousand more 'scare stories' like this as unionists continue to clutch at straws as they slide inexorably towards Independence.

 

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