Would Scottish Independence Affect Your Savings?
Many people may be looking forward to 2014 as it is a World Cup year and another major sporting event taking place in the United Kingdom, including the 2014 Commonwealth Games being hosted in Glasgow but there is another big event for the people of Scotland, with ramifications across England, Wales and Northern Ireland.
On Thursday the 18th of September 2014, the Scottish Independence Referendum will take place and it could have major implications for everyone in the United Kingdom, not just those in Scotland. There are plenty of joke comments being made about the potential split in the Union based on cultural and historical stereotypes but there is a need for people to be aware that there may be changes to the way they look after their money.
There has already been a focus on money with respected to the referendum with the question of whether Scotland would continue to use sterling (GBP), turn to the Euro or perhaps even consider their own currency. There is no decision on this one way or another at the moment but it does provide both sides of the referendum vote to put out propaganda and opinions that they will believe will sway people to their side of the vote. At the moment, there is no real announcement or indication either way about the future of the currency in Scotland so it is political manoeuvring at best.
Scottish banking institutions are at the heart of UK finance
The fact that so many people current have a lot of money tied up in investments and savings with companies who have Scottish roots, origins, connections or are based in Scotland must be a slight cause for concern as to what will happen if the YES vote wins the referendum. Customers who have savings with the Bank of Scotland (now part of HBOS, in turn owned by Lloyds TSB and in turn again 41% owned by the UK government), the Royal Bank of Scotland (including Natwest – this group is 81% owned by the UK government, which is looking to offload its stake in 2014), Scottish Widows, Standard Life or even the Clydesdale Bank may start to wonder if there will be any impact on their savings if they do. Currently, all of these banks and financial institutions are in the United Kingdom and strongly linked but if the Union is broken up, will this remain the case?
Given that savings with some of these institutions could be classed as foreign investment savings, will people need to start thinking about their financial security and safety. With so many financial situations and crisis after crisis taking place in recent times, it is only natural that people would be concerned about where their money and if it will be safeguarded if the Union splits and then Scotland faces financial difficulty.
The NO vote is running with the notion that the financial security of Scotland cannot be guaranteed if they break from the Union. This is obviously going to be a weighted view to strengthen the popularity of maintaining the status quo but who is to say what would happen if Scotland achieved independence and then suffered a number of negative impacts with respect to their banking institutions?
Will your money be safe?
If Scotland becomes a foreign country, will the financial assurances and necessary safety net provided by the Financial Services Compensation Scheme remain in place? This will surely have to be one of the main topics of discussions about any inter-government relationships because there is a lot of money and a lot of people at potential risk. If Scotland does break away but then decides to maintain the UK regulation with regards to finance matters, there should be no problem. There is also the fact that Scotland may set up their own relative regulations which will provide safety for investors.
In any event, even if Scotland does vote for independence on the 18th of September 2014, it is not as though everyone will wake up on the 19th of September and a clean break will have been carried out. Even the most pro-Scottish backers have warned that it will be a lengthy process to independence and a YES vote is just the beginning of the process. This means that investors probably don’t need to worry too much about their savings at this current time however; this is not to say that you should be completely blasé about your money.
You should always look for the best deal for your money and you should always look to ensure that your money is being safely looked after. If a YES vote at the Scottish Independence Referendum has the possibility to affect your savings, you may decide that it is best to move first and be protected against any possible problem. At least then your outcome will be in your hands as opposed to having to sit and wait to see if any issue does occur.
This article is from one of our guest bloggers and puts forward one point of view – that those who having savings or investments in Scotland should at least consider a potential impact from Scottish independence. Please note that our website does not offer personal advice. Should you have concerns raised by this article, you should always speak to your independent financial advisor.