10. Banking and Financial Services

These positions stem from the decision to retain sterling. Under sterlingisation, Scotland does not control monetary policy or have automatic access to the Bank of England as lender of last resort. The framework therefore prioritises strong domestic regulation, clear deposit protection, and customer continuity while building credible Scottish institutions.

The sequence is deliberate. A Scottish regulatory authority, under or alongside the Scottish Central Bank, would prudentially supervise banks with high capital and liquidity standards from day one and operate a statutory resolution regime that protects depositors, maintains critical services and limits taxpayer cost. A Scottish deposit protection scheme would match the UK coverage level at the outset, funded mainly by an industry levy with an explicit fiscal backstop, and transitional arrangements would ensure no depositor faces a gap in cover on Independence Day. Decisions on legal domicile and headquarters of major institutions would remain commercial choices; policy would compete on stability, sterling continuity, skills and proportionate regulation, while prioritising employment, tax revenue and customer service continuity in Scotland, and subjecting systemically important institutions to enhanced supervision regardless of ownership. Strong consumer conduct rules would carry over into Scottish law, enforced by a Scottish authority, with guaranteed access to independent ombudsman-style redress and cooperation agreements so that cross-border customers are not left without a route to help.

These arrangements accept the real constraints of sterlingisation and build the strongest possible domestic framework within them. Credible regulation, a properly funded deposit scheme with a fiscal backstop, and uninterrupted consumer protection are the minimum requirements for public and market confidence. The system is designed to be conservative and stability-focused in the early years of independence. Prevention and orderly resolution do more work because the monetary safety net is thinner; continuity of cover and redress is treated as a hard operational test, not a political assurance.

10.1 Bank regulation and resolution

A Scottish regulatory authority, under or alongside the Scottish Central Bank, would prudentially regulate and supervise banks and other financial institutions operating in Scotland. A clear resolution regime would allow failing banks to be dealt with in an orderly way that protects depositors, maintains critical services and minimises taxpayer cost. Close cooperation with UK and international regulators would manage cross-border groups. High capital and liquidity standards would apply from day one. Under sterlingisation, prevention and orderly resolution are the primary defences; the regulatory and resolution framework is built to provide both. Transitional arrangements would ensure continuous supervisory coverage while Scottish capacity is completed.

10.2 Deposit protection

A Scottish deposit protection scheme would cover deposits up to a limit initially matching the current UK level. It would be funded mainly by an industry levy, backed by an explicit Scottish Government fiscal guarantee. Transitional arrangements would ensure there is no gap in protection on Independence Day. Under sterlingisation, credible deposit protection is particularly important because automatic access to the Bank of England as lender of last resort is not available. Together with strong regulation, a clear resolution regime and the wider fiscal and central-bank framework, the scheme is designed to maintain depositor confidence and overall financial stability. No depositor should face a gap in cover; that is the operational test.

10.3 Major financial institutions

Decisions about legal domicile, headquarters location and group structure would remain commercial decisions for the institutions themselves. Scotland would aim to remain an attractive location through political stability, sterling continuity, a skilled workforce and a proportionate regulatory regime. Some restructuring across the new border is likely; policy would prioritise protecting employment, tax revenue, and customer service continuity in Scotland. Systemically important institutions would face enhanced supervision and resolution planning regardless of ultimate ownership. The state sets the conditions and the rules; firms choose where to put their legal entities and headquarters. The objective is to make Scotland a place they choose to stay and to grow.

10.4 Consumer financial protection

A Scottish authority would maintain and enforce strong consumer financial protection rules, with a clear mandate for conduct, complaints and redress. Existing protections on products, advice and fair treatment would carry over; the Scottish Parliament could strengthen them where appropriate. Access to an independent ombudsman-style service would be guaranteed. Cross-border issues would be managed through cooperation agreements so that customers are not left without effective redress. Protection continues without interruption; standards can be raised by democratic choice; no customer falls into a gap because of the border. That is the measure of a workable consumer financial protection system.

Taken together, these four positions define a banking and financial services stance that is conservative on risk, continuous for depositors and customers, realistic about commercial restructuring, and institutionally complete within the limits of sterlingisation. The package rejects two failures at once: assuming that UK-wide schemes and supervision simply continue without a Scottish legal and operational base, and pretending that a thinner monetary safety net does not require stronger prevention, clearer resolution and unbroken deposit and conduct protection.

It depends on high prudential standards from day one, a funded deposit scheme with a credible fiscal backstop, formal cooperation with UK regulators for cross-border groups and complaints, and the wider fiscal rules that discipline any public contingent support. Those are demanding requirements. They are also the minimum combination that keeps deposits safe, customers protected, and the system stable while Scotland builds its own financial authorities. Strong regulation; no gap in deposit cover; substance over headquarters symbolism; uninterrupted consumer redress — that is the framework.