EDINBURGH (MarketWatch)—Scotland’s financial-services industry has for several hundred years taken its cue from London, but that could change if a proposed 2014 vote in the Celtic nation brings the United Kingdom’s 300-year-old union to an end.
As one of Europe’s leading financial centers, Scotland is home to global players in banking, pensions and life insurance. Major British investment houses remain based here, including Martin Currie Investment Management Limited UK:MNP -0.73% , Baillie Gifford & Co UK:BGFD +0.30% , Standard Life PLC SLFPF +11.77% , Artemis Investment Management LLP and Aberdeen Asset Management PLC UK:ADN -0.39% .
Scotland is recognized for its strength in asset management because of a long association with the industry dating back to the 1870s, when Scotsman Robert Fleming pioneered investment trusts.
Scottish Financial Enterprise, the body that represents Scotland’s financial-services industry, estimates that Scotland has around 750 billion British pounds ($1.21 trillion) in assets under management.
However, if Scotland votes for independence from the U.K. in a referendum in just under two years, its thriving financial-services industry could be forced to adapt to an entirely different business and regulatory environment. This prospect is causing anxiety in some quarters of the industry.
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Ross Leckie, director of communications at Artemis Investment Management, said: “If there’s one thing this industry dislikes, it’s uncertainty.” Leckie added: “We’re long term investors, it takes a long time to grow our business, so we need to know what this means sooner rather than later.”
Leckie said that some Artemis clients have expressed concern about the potential ramifications of independence. Concerns center on what a change of regulator might do to the legal arrangements of their investments.
Today, various London-based authorities including the Financial Services Authority are responsible for regulating the region’s financial institutions. The Bank of England, also London-based, controls the levers to monetary policy. A “yes” vote to Scottish independence would likely see those powers transferred to Edinburgh.
For fund managers north of the English border, the prospect of major changes is particularly problematic because their focus is on finding long-term investment opportunities. That’s hard to do if the underlying planning environment is subject to change….”
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