GIVEN the size and frequency of scandals surrounding the financial services sector it ought to have been made clear some time ago how it would be regulated under independence.
On the one hand the White Paper published last week acknowledges the need for nothing to change that would upset the equilibrium and stability of the financial markets. To that extent there is no plan to alter the existing system of safeguards in the United Kingdom or Europe.
However, the paper proposes a Scottish regulator to discharge the responsibilities of the UK Financial Conduct Authority (FCA) which has a duty to supervise the behaviour of financial firms. This appears to be a nod to all those mis-selling and other misdemeanours that have brought the sector into disrepute.
But far from breaking away from the rest of the UK, this is another half-way house measure. Stability stays with London, the Bank of England and the Prudential Regulatory Authority, while behaviour comes under the stick of the Scots.
Why a need for this division and an extra regulator? Is it merely tartan veneer on a system that cannot be broken without causing disruption?
The paper suggests it will have no additional or different powers. It states: “It will work on a closely harmonised basis with the UK regulators, delivering an aligned conduct regulatory framework, to retain a broadly integrated market across the sterling area. The regulatory approach will include the application of single rulebooks and supervisory handbooks.”
So, no change to what it does now. As far as I can see, nowhere in the paper does it say what this Scottish regulator will do that is not already done and cannot continue to be done by the FCA in London.
Companies may be relieved if indeed there is no additional regulator with a different set of rules or ability to contradict decisions made by the FCA in London.
However, it will probably mean the creation of an office somewhere in Scotland manned by a high-paid civil servant supported by an army of staff, all operating at the taxpayers’ expense and for no obvious reason.
Allegations add to McEwan’s woes
ROYAL Bank of Scotland’s new boss Ross McEwan denied suggestions last week that the bank had been involved in any systematic attempts at profiteering from struggling companies.
Whether or not this is the case, by his own admission this has damaged the bank’s already battered reputation and now that it faces internal and external investigations its behaviour is once again under intense scrutiny.
McEwan has been advocating a new relationship with the bank’s customers, but it is hard to see many of them putting him on their Christmas card list this year.