Commission in a kilt, tartan regulators, Caledonian compulsion and Craig Levein
Friday, October 19th, 2012

I must admit that I asked one Scottish life office public relations professional this week whether all the talk in the bars of Scotland was about the Scottish referendum. He said: “Everyone in the bars of Scotland is talking about the need to sack Craig Levein as Scotland manager”. (In the interests of balance, Mr Levein may have some supporters in the bars of Scotland and the next time the Money Debate staff are in one, we’ll let you know).

But this is not, alas, a football blogsite and we must confine ourselves, mostly, to financial services. Among other things Scottish independence would throw up a lot of issues for insurance, fund firms and banks.

The issues are mostly logistical ones for fund houses, though the EU passporting legislation should mean they avoid too many problems. For insurance companies I think there may be more issues. I doubt anyone, Scottish, English or anyone else, would hesitate to invest in Martin Currie, if it decided to actively canvass for independence or the union.

However, a big life office – let’s say Standard Life – will not want to be seen swaying the argument unless it really sees its interests under threat. But that might start to unsettle patriotic Scots, maybe even in both camps, if it involves a threat to quit Lothian Road for the Gherkin in the City of London.

It’s true the majority of Standard Life’s clients may well be in the rest of the UK. But Scottish clients will be a bigger minority in the firm’s customer profile than let’s say in Aviva’s. Why make waves when you don’t have to?

The banks are a big issue. Would Scotland have been in a worse situation than Ireland when its banks blew up? For banks themselves, if they wanted to, it is not impossible to imagine the headquarters moving from the Mound in Edinburgh down to Canary Wharf, almost desk by desk and phone by phone, rather than with a fanfare or poignant retreat played on the pipes.

In terms of adviser, I think they would cope with any tax and regulatory changes – they could thrive on them – though they wouldn’t welcome tax on small firms going up.

The situation regarding personal tax rates is also interesting, but again that is an easily managed advice challenge. Advisers will presumably have no problem adjusting their advice. They already do say around university fees, but also the slightly different approaches to what counts as assets for inheritance and long term care purposes and, in the latter case, small differences in the state support given. However, it is possible to imagine some huge change that would see the advice regimes radically diverge.

What if Scotland embraced compulsory pension savings due to high opt outs but the rest of the UK did not?

And what, of course, about regulation? Would Scotland want to fully embrace the FCA or PRA or develop its own. The SPRA sounds almost Scottish, though we don’t advise pronouncing the Financial Conduct Authority Scotland (FCAS) too quickly in a West of Scotland accent.

Would Scotland embrace lighter touch regulation in a smaller country, because it was easier to know what was going on or would the consumer agenda get even more of a hearing? Who knows – finance minister John Swinney used to work at Scottish Amicable of course. Then again Scottish Amicable is now part of Pru. Mr Swinney might just want to try and stop that sort of thing happening again.

One thing I’m pretty sure about is that Scotland might want to attract more financial services businesses. Can it afford tax competition? Would the EU outlaw such behaviour as a condition of entry/reentry? No share stamp duty in a Scottish stock market? A few more fund firms might move North – being careful not to repeat the Hill Samuel experience of course.

What if someone made the argument that the British RDR had shifted advice away from the masses and Scotland with its slightly lower economic profile decided to reinstate commission?

As in ‘you can pay for advice with commission but only if you’re Scottish’. For IFAs that would mark the border more than Hadrian’s Wall.  Finally and most importantly perhaps the Money Debate would need to set up a Scottish branch office. Glasgow or Edinburgh? What a dilemma.

All this and Craig Levein’s future too. So much to talk about north of the border this weekend.




Emergency budget tax and RDR probably do coincide
Monday, July 5th, 2010

The shape of top end advice is changing due to the RDR but the emergency budget tax changes may well reinforce it. The changes lend themselves to ongoing advice and will help hasten a move from last minute pension contributions as execs get close to retirement to more regular, smaller but still significant amounts invested hopefully over decades. Certainly what has been suggested for reliefs and allowances on pensions makes this the likely outcome.

The point was made by Raymond James head of retail business development David Hazelton at the Tax Exempt Savings Association’s emergency budget seminar last week. (David had several conversations with advisers before his speech including Robert Reid and Jason Butler.)

I think this is probably undeniable and in a way, for those lucky enough to have well off client bases, the tax landscape may make their lives easier as they convert model or indeed consolidate their new model businesses.

However, I did make one point to the seminar which I think is still pertinent and not so rosy. It is not just the mass affluent who are expected by the coaliton government to make much more provision for themselves but several income groups below this too and I still can’t see how they are going to be advised economically or indeed at all after 2013.
VAT – vicious advice tax?
Thursday, May 13th, 2010

Oh dear. Did anyone just hear Stephanie Flanders, the BBC economics editor on Radio Two. She was talking about the fact many eminent economists are predicting a big VAT rise. She mulled some things VAT might be extended to. Financial services, she says. What on shares and things says Jeremy Vine? Well, there are certain bank services, says Flanders.

This hasn’t happened yet of course. These are economists saying the Government may have to do this and a journalist saying here is one way you could extend it.

But unfortunately I reckon IFAs could probably predict one place offering something akin to  ‘bank services’ though they would say what they do is much better.

Actually any advice or financial transaction hit is very small beer in comparison with putting up overall VAT. What I don’t know is how price sensitive advice is to this. There is quite a strong argument to say don’t do it especially at the moment but let’s hope such arguments are not needed.