Member Article

"Yes" vote may lead Pearson Jones to temporarily suspend new investments until providers relocate

All new investments in Scottish-based financial services providers maybe temporarily suspended if they do not deliver rapidly on plans to re-locate to the UK in the event of a vote for independence, a leading wealth management company says.

However, Leeds-based Pearson Jones Plc says the temporary suspension would happen only if Scottish-based financial organisations surveyed earlier this year lapse on plans to relocate to England if a “Yes” vote prevails next week (September 18).

Pearson Jones Plc, which has 2,100 clients with some exposure to a Scottish provider, researched the contingency plans of financial organisations in the event of a vote for independence this spring when a “Yes” vote looked far less likely.

In the survey, financial services companies including Standard Life, Scottish Life, Scottish Provident, Alliance Trust and Aberdeen Asset Management all indicated that they had plans to relocate operations to England if Scotland becomes independent.

Pearson Jones manages investments, mainly for Yorkshire clients, totaling about £1.2bn, about £300m of which is held via institutions headquartered in Scotland.

Pearson Jones Plc investment director, Peter Heckingbottom, says: “While, in an extreme case, we may have to temporarily suspend new investments in the event of a “Yes” vote, we are not expecting to have to do so as we anticipate that all these companies will have now fully prepared for this eventuality and will issue further updates on 19 September about their plans.

“We do not anticipate an immediate risk to investments from devolution if the companies we deal with deliver relocation to the UK in the controlled and measured way our research indicated. However, as these survey findings are not widely known, relocation to England by these organisations would have a dramatic, unbudgeted impact on Scotland’s taxation revenue for a newly-created administration.” In responses to the Pearson Jones survey, Scottish Life and Scottish Provident said: “We have announced plans to change most brand names to Royal London in 2014 and 2015. Royal London is incorporated in England with a HO in London. Clients have a legal contract with this English incorporated company”.

Standard Life said: “We have started work to establish additional registered companies to operate outside Scotland into which we could transfer operations;” Alliance Trust replied: “To remove uncertainty we have started work to establish an additional company registered in England” and Aberdeen Asset Management said: “We have significant operations in London.”

Peter Heckingbottom said that Pearson Jones carried out the research due to concerns about regulatory protection, currency and taxation issues.

He said: “An independent Scotland needs to have the resources to provide a financial safety net like the UK’s Financial Services Compensation Scheme which protects deposits up to £85,000 and some investments on an unlimited basis.

“A guarantee is of use only if the guarantor, which in future may potentially be the state of Scotland, is good for the liability. Given uncertainty over an independent Scotland’s income, as it will be heavily dependent on oil prices, this is a less secure position for investors than now.

“The situation with currency is a complete unknown, as are future tax rates which could deviate widely from those in the UK. In this situation, a UK investor would almost certainly prefer a UK-headquartered financial services provider and this is what these financial organisations have taken on board.” /more… Scotland3

Pearson Jones Plc, which has 123 staff, offers wealth management, pensions and employee benefits, tax and trust planning has total funds under management of more than £1.8bn. The firm is among about 600 IFA businesses in the UK to be accredited Chartered Financial Planners by the Chartered Insurance Institute.

This was posted in Bdaily's Members' News section by Mike Clarke Communications .