As Scots gear up for a vote next September on whether they want to end more than 300 years of union with England, Laura Miller asks advisers north of the border what impact they think an independent Scotland will have on their businesses
Scotland's ruling Scottish National Party (SNP) has finally published its long-awaited white paper on independence from the rest of the UK.
Voting will take place on 18 September when Scots will be asked the yes or no question: "Should Scotland be an independent country?"
Under the SNP's proposals, from 2016 Scotland would "implement an improved and streamlined consumer protection and regulatory regime" for the financial services industry.
Scotland's IFAs speak out on independence
It would also overhaul its tax system, including reducing corporation tax by up to three percentage points, which the paper states "is essential to redress the unbalanced nature of the UK economy".
So what do financial services practitioners north of the border – who are currently regulated by the Financial Conduct Authority (FCA) and pay levies to that body, the Financial Services Compensation Scheme (FSCS) and the Financial Ombudsman Service (FOS) – think about the prospect of being ruled by a different set of bodies, or possibly both the English and Scottish versions, under a new tax regime?
O'Reilly Financial Services has offices in both England and Scotland. IFA at the firm Mark English fears the business could be caught between "an invisible border", adding to what is already a complex situation fraught with regional differences.
"Our head office is in north Yorkshire but we have offices in Scotland, so will we be taxed under Scottish taxation or English taxation? There are already differences in terminology between the two countries in terms of partnerships and trusts – an independent Scotland would add more," he said.
English is also concerned about whether he will have to have a different taxation conversation with clients.
"For example, if we're dealing with Prudential, based in England, for a client based in Scotland, will the client be taxed under English law? Similarly, Standard Life, based in Scotland – will English clients dealing with them be taxed under Scottish law? Will the rules be based on nationality or where you live? It's not at all clear."
Adding to English's fears is the impact of a duplication of regulators, ombudsmans and compensation schemes – and the potential for a new swathe of exams.
"It would be a challenge if different exams were required for the two different regimes. It would probably have to make our service more expensive, particularly with two regulators, meaning two lots of levies," he said.
Edinburgh-based Lift-Advice IFA Steven Whitby is also concerned he would have to increase his fees if Scots vote yes for independence – and echoes English's worries about exams.
"It is possible an independent Scotland would increase our costs, which we would probably have to pass onto clients. There is also a possibility returns on ISAs and pensions would be poorer as costs could be increased," he said.
"I would be very annoyed if I had to do a whole new raft of exams. I have all the Chartered and Certified qualifications already."
Johnston Financial managing director Adrian Johnston, also based in Edinburgh, believes advisers may have to absorb any added costs - or risk losing clients.
"I doubt that advisers would be able to charge more for their advice as there is a finite cost that clients will bear before they forego those services," he said.
English, Whitby and Johnston can find no benefits whatsoever for either their clients or themselves as small business owners and advisers of an independent Scotland.
Wishart Wealth Management managing director Iain Wishart, another Edinburgh-based IFA, goes even further with his criticism.
"I hope none of this goes ahead. Scotland has enough devolved power and I can't see an independent Scotland being viable.
"I would move my headquarters to England if I had to, if that meant maintaining the status quo and not applying to a new regulator. I don't want to be part of an independent Scotland."
Furthermore, Wishart believes – contrary to what the SNP says in its white paper on Scottish independence – the country would not be able to support itself economically.
"There are not enough people in the private sector to fund the country – there are four people in the public sector to every one person in the private sector. That's not enough.
"An independent Scotland would also lose the cross-benefit of London as a financial centre."
Wishart said he has yet to meet anyone in business that is in favour of an independent Scotland, "but whenever you mention the figures don't stack up you're told you're not Scottish enough".
So the verdict from the frontline is clear – advisers see an independent Scotland as yet another headache in an already complex landscape. But it seems unlikely Alex Salmond or his Scottish Nationalist party is listening.
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