Comment: Driving prosperity for Scottish financial services

The sector's outlook must remain bright, say UK government Scotland Office Minister Lord Duncan and Economic Secretary to the Treasury John Glen.

Standard Life Aberdeen is one of the major asset managers based in Scotland. Picture: Graham Flack

Scotland has a world-renowned reputation for business success and innovation, particularly in financial services, which employs more than 150,000 people across the country, and accounts for almost 10 per cent of the Scottish economy.

For this reason, it is essential that as we negotiate to leave the EU, we work together with the industry’s leaders to ensure the present and future remain bright for this sector. This goal is front and centre of the agenda of the Scottish financial services roundtable, the second meeting of which we were delighted to host recently.

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This expert forum is crucial to helping us understand what we can do to help enhance the sector and ensure Scottish firms continue to grow and thrive.

As with the first meeting, it was invaluable to hear expert views on the UK government’s role in driving the competitiveness of the Scottish financial services industry.

It was also an opportunity for us to confirm just how important we see this sector and how we want to ensure Scottish firms remain at the forefront of the industry post-Brexit.

We know how important it is to the financial services industry that they have continued market access, and an implementation period that provides certainty. The European Council guidelines agreed in December point to the shared desire of the EU and the UK to make rapid progress on this, with formal talks beginning very soon.

And as we move into Phase Two of the Brexit negotiations, the Prime Minister has made it clear that we will prioritise seeking a bold and ambitious free trade agreement that will be of greater scope and ambition than any such agreement before it.

Financial firms from the EU selling products to UK consumers are seeking clarity about how they provide continuity of service. They can rest assured that we are prepared to act, if necessary, to ensure that they can continue to meet their obligations under a range of scenarios.

It is in the interest of the EU to take similar measures to offer certainty to UK financial services customers elsewhere in Europe, including 30 million insurance policyholders who are served by UK firms.

But our business with Europe is just one part of the story – for the first time in 40 years, the UK is preparing for its own independent trade policy.

The Prime Minister and Chancellor have prioritised financial services in their economic and financial dialogues with China, Brazil, and India – major emerging economies – which will benefit the financial services sector right across the UK, including in Scotland.

We also have a comprehensive programme of engagement with other major economies such as Japan, Singapore and Korea, with the aim of deepening trade links in financial services, and seizing the opportunities presented by Brexit.

By strengthening ties with our global partners and identifying new markets, we are paving the way for an even brighter future for Scotland’s financial services industry.

The input of the financial services roundtable – which draws on experience from across the sector, including fintech and asset management, is vital to making this a success.

There is huge potential for innovation in financial services in Scotland and we want to help develop the sector – including creating the best possible business and regulatory environment for firms across the UK. Our commitment to Scotland was underlined by the appointment of two fintech envoys in December 2016, David Ferguson, who was at our meeting, and Louise Smith.

Elsewhere in the sector, many asset-managers are headquartered in Scotland managing the savings and pensions of millions of people including Baillie Gifford, Scottish Widows and Standard Life Aberdeen, the latter of whom was represented at our latest get-together.

Approximately 7,500 people are directly employed by the Scottish asset-management industry, while a further 5,100 jobs are indirectly dependent on the industry.

To enhance the UK’s position as a global centre for asset-management, the UK government recently published the Investment Management Strategy II, a long-term strategy designed to enhance the UK’s position as a global centre for asset-management, and deliver the best possible outcomes for consumers, businesses, and the UK economy.

It is clear that the UK government is delivering for Scotland, and Scotland is delivering success for the UK. Together we will work hard to ensure that we continue as the financial services hub for both Europe and the rest of the world.