BANKING REPORT SHOWS FUTURE FOR INDUSTRY

BANKING REPORT SHOWS FUTURE FOR INDUSTRY

Commenting on a report by the Economy Committee into Scotland’s Financial Services sector the Deputy Convenor of the Committee Rob Gibson MSP said the report offered a way forward for the sector and that we need a vision for the future rather than dwelling on the past.

The report also calls on the regulatory bodies to ensure they are properly represented outside of London and pay sufficient focus to non-London HQ’d banks and engage properly with the Scottish Government.

Mr Gibson said:

“It is time to stop looking at the past and look toward a strong Scottish financial sector in the future.

“We have a diverse financial sector in Scotland that can and will flourish with the right support.

“The Scottish Government is fully behind Scotland’s financial sector.

“What is needed now is for the interests of Scotland to be thoroughly represented in changes to the regulatory system at UK and European level and for the importance of Scottish headquarters to be at the heart of the future for RBS and Lloyd HBOS.”

Key paragraphs from the extensive report which can be found here (http://www.scottish.parliament.uk/s3/committees/eet/reports-10/eer10-03-vol01.htm) include:

We believe that despite the problems that we have witnessed, our financial services sector can be reformed and can continue to play an important role in our economy and our society as a whole. The Committee wants to see our largest banks reformed and put back on a sustainable footing in terms of how they are run. We want to see a substantial increase in competition and in the diversity of players in this sector in Scotland. We also want to see the other more successful parts of the financial services sector supported and encouraged to flourish and grow. The Committee believes that there is a ‘once-in-a-generation’ chance for reform and we have set out our vision of some of the changes that are needed.

It considers that focusing on developing a successful future for this sector is the critical issue at this juncture. The need is for a vision for a robust and thriving financial sector in the future, rather than beating ourselves up over the events of the past.

On Regulation
The Committee calls on the Tripartite Authorities to ensure that there is geographical consistency in the way in which they fulfil their statutory duties. While no evidence emerged from the Committee’s inquiry to suggest that there were any specific underlying regulatory failures in relation to the British banks that failed, the Committee notes that all of these banks were located outside of London. The Committee suggests that the Tripartite Authorities, particularly the FSA, should assess the consistency of their geographical engagement and how they engage with the Scottish Government as they assume a stronger role in the regulation and supervision of the financial sector going forward.

Future Regulation
The Committee believes that care needs to be taken in the development of the regulatory regime in order to ensure that the diversity of the financial services sector is protected and that undue burdens are not placed on the types of institution that proved that their risk policies and systems were more resilient during the financial crisis.

EU Regulation

The Committee calls on the Scottish Government to engage with the UK authorities systematically at the early stages of the development of European Union legislation and emerging financial regulation, as well as on the transposition of European Union directives by the UK Parliament. We recommend that an assessment of the challenges and opportunities from future EU legislative proposals is made and shared with the Parliament.