Publication - minutes

Financial Services Advisory Board minutes: September 2017

Published: 13 Feb 2018
Location: Scottish Parliament
Record of discussion for the September 2017 meeting of the Financial Services Advisory Board (FiSAB).
Published:
13 Feb 2018
Financial Services Advisory Board minutes: September 2017

Attendees and apologies

Present

  • Keith Brown MSP, Cabinet Secretary for Economy, Jobs and Fair Work
  • Paul Wheelhouse MSP, Minister for Business, Innovation and Energy
  • Philip Grant, Lloyds Banking Group
  • Christine O’Neill, Brodies
  • Sue Dawe, EY
  • Professor Sir Tim O’Shea, University of Edinburgh
  • Graeme Jones, SFE
  • Linda Hanna, Scottish Enterprise

Also in attendance

  • Ian Hanson, Skills Development Scotland
  • Sam Subesinghe, KPMG
  • Innes Ledingham, PwC
  • Jonathan Couto, PwC

Scottish Government

  • Karen Rodger, Financial Services & FinTech Policy

Apologies

  • Jim Pettigrew, SFE
  • Barry Muir, State Street
  • Barry O’Dwyer, Standard Life
  • Catherine Burnet, KPMG
  • Agnes Tolmie, Unite
  • Anne Richards, M&G Co Ltd
  • Angus McPherson, Noble and Company
  • David Skinn, Aviva
  • Jayne-Anne Gadhia, Virgin Money
  • Jim Lindsay, FiSAB Skills Group
  • Malcolm Buchanan, Royal Bank of Scotland
  • Mary McAllan, Scottish Government
  • Lena Wilson, Scottish Enterprise

Items and actions

Welcome and Introductions

1.1. Mr Brown welcomed board members to the meeting noting that this was Sue Dawe’s first meeting as a member of FiSAB.

1.2. Mr Brown gave apologies from the First Minister, noting that she had an opportunity to discuss the papers presented at this meeting with Graeme Jones and Philip Grant in week before the board meeting.

Discussion of High Level Strategy Paper

2.1. Mr Brown invited Graeme Jones and Philip Grant to present the work of SFE’s High Level Strategy Group.

2.2. Graeme Jones described the work that has been done to develop the High Level Strategy, led by Philip Grant of Lloyds Banking Group supported by PwC. Five ‘action themes’ have been identified.

Theme 1: New framework for sector engagement

3.1. The strategy proposes a new framework for engagement between the industry and the public sector. The paper recognizes the value of FiSAB in connecting industry and government, while recommending changes to the way in which the Board operates.

3.2. FiSAB, as a high-level board continues to provide a useful overview of the big issues affecting the sector, but a new model is proposed to drive the actions required from industry and from public sector partners to implement the new strategy.

3.3. The FinTech working group led by Mr Wheelhouse was presented as an example of the kind of flexible, fast-paced group that could be used to support FiSAB, and support implementation of the strategy, drawing together representatives from industry and public sector in support of common goals. This could be used as a model for a more permanent operating group reporting to FiSAB.

3.4. Graeme Jones asked whether FiSAB could increase its engagement with the industry regulators noting that the financial Conduct Authority’s (FCA) appointment of Maggie Craig as head of Department for Scotland represented an opportunity to increase the regulator’s awareness of the Scottish sectors needs and concerns and allow Scottish firms greater access to regulatory advice, including the FinTech regulatory sandbox.

3.5. Members noted that increased regulatory presence in Scotland could increase Scotland’s attractiveness as a centre for professional services, attracting skilled staff in audit and regulation. 3.6. Mr Brown agreed that regulatory contact is important and that he would support the industry’s call for greater access to the FCA in Scotland.

Theme 2: promote and manage the ecosystem and ‘Scotland FS’

4.1. Philip noted that the financial services sector is already doing a lot of work to support the strategy’s themes, but that very often this work is carried out by businesses and organisations working alone. Far more could be achieved if the industry was to work collectively.

4.2. Philip acknowledged SFE’s increased activity within the sector and the work that Graeme Jones and colleagues have been doing to engage with businesses across the sector. SFE will continue to be a focal point for sector engagement and action, but in doing so needs the full support of the sector.

4.3. Philip noted the valued support that the sector receives from Scottish Enterprise (SE) and that the relationship between industry and SE has been revitalised in recent months.

4.4. Linda Hanna welcomed Philip’s comments, noting that SE is prepared to work in support of industry-led activity to develop and promote the financial sector in Scotland.

4.5. Philip outlined recent changes within the sector in Scotland noting that while employment levels have remained strong, there has been a shift in the location of those jobs, notably in a shift to increased employment in challenger banks and in the asset servicing sector. The sector remains important to Scotland as an employer and as a contributor to economic growth and the sector’s strategy needs to reflect this.

4.6. Graeme Jones noted that Scotland is internationally recognised in its own right as a financial centre of excellence. Scotland’s reputation is important in attracting inward investment, where Scotland is competing not only with London but with other emerging centres in the UK.

4.7. The board agreed that Scotland’s financial sector needs to demonstrate compelling arguments for investing in Scotland. Linda noted that while Scotland can demonstrate a clear cost advantage over London, investment in Scotland should not be seen as a ‘race to the bottom’ but about the ability to attract high quality jobs at a lower cost. Mr Brown agreed noting that inward investors and potential employees should understand the whole quality of life package offered by Scotland, and that the Scottish Government is keen to see the Living Wage further promoted.

Theme 3: Collaborate for innovation

5.1. Philip Grant described the third theme in the proposed strategy noting that the financial services sector has undergone significant change in recent years and the further change is inevitable. Delivery of services is becoming increasingly digital and consumers are now faced with increasing responsibility for management of their own financial affairs. The industry would need to be mindful of unintended consequences of these consumer ‘freedoms’ and online delivery of services would require a significant rethink by industry in how the sector meets customer needs and expectations.

5.2. FinTech has been recognised as one of the greatest opportunities and challenges facing the sector in Scotland. To compete with London as a centre of excellence would require the industry in Scotland to work together to build capacity.

5.3. Philip highlighted areas where the sector could work collaboratively, nothing that City Deals were one area where industry has perhaps missed an opportunity to add value, although emphasizing that the industry would like to become more engages as remaining deals are agreed.

5.4. Mr Wheelhouse welcomed the call for increased collaboration, noting that recent work on FinTech showed that the industry and public sector were able to work well together in pursuit of common interests. He noted that collaboration should provide opportunities across Scotland, not just in Edinburgh.

Theme 4: Build and attract future skills and talent

6.1. Philip Grant move on to the fourth strategy theme noting that the industry changes highlighted earlier in the meeting, particularly the shift to digital delivery of services is likely to have a significant impact on the numbers and type of staff employed in the sector and the skills required. The sector has been successful in redeploying staff as operational needs have changed, but available opportunities will start to narrow. as the industry transitions.

6.2. Philip noted that the industry could make greater use of the apprenticeship system, training not only new entrants to the sector, but also retraining existing staff and developing more complex skills to degree level.

6.3. Ian Hanson of Skills Development Scotland (SDs) welcomed the strategy’s recognition of the importance of skills to the sector. He highlighted the important work done by the FiSAB Skills Group led by Jim Lindsay, and the particular importance of the sector Skills Investment Plan (SIP). Ian asked that work implementing this theme of the strategy include the continued development of the SIP, with full industry and SDS support. Further work will be required to integrate the skills group into the new governance model.

6.4. He noted that future work on skills should link into the recent review of SDS and SFC and that there is an opportunity to increase alignment between the apprenticeship system and industry needs.

6.5. Mr Brown agreed that it would be important to maintain a focus on developing the skilled workforce essential to growth in the sector, noting that the industry needs to explicitly articulate its requirements, in both the short and long-term.

Theme 5: National partnership for social impact

7.1. Philip Grant introduced the fifth theme, highlighting the important work done by many in the industry to support wider economic and social aims. However, he recognised that much of this activity is led by companies on an individual basis and that more could be achieved if the industry worked collectively in collaboration with the public sector aligned to government priorities and strategies – e.g. on digital skills, the needs of an ageing population, access to finance.

7.2. Mr Brown agreed that the financial sector as one the most important contributors to the Scottish economy also has a key role to play in supporting the wider economy and the Scottish people, through initiatives such as developing financial literacy, which in turn would support development of skills essential for the sector.

Conclusions

8.1. Mr Brown thanked the Philip Grant and colleagues for the work done in developing the proposed strategy. He noted the progress that has been made by the sector on working collaborative, noting FinTech as a good example of what can be achieved. He agreed that FiSAB should have a greater focus on the actions and outcomes needed to continue to develop the financial sector in Scotland.

8.2. Mr Wheelhouse also asked the industry to consider the positive links that could be made between sectors, e.g. using the skills of the gaming sector in financial education.

8.3. The Board indicated support for the proposed strategy, with members noting that Scotland needs to act quickly to maintain Scotland’s position and that clear measures will need to be greed to monitor the success of the strategy’s implementation.

8.4. Members agreed that successful implementation of the strategy will need full industry support and effective industry leadership. Public sector organisations are well placed and ready to support the sector in achieving ongoing success.

Contact

Email: jacqueline.mckellan@gov.scot

Telephone: 0300 244 1196

Post: Scottish Government
Financial Services and SME Finance Policy Team
Innovation, Investment & Industries Division
Directorate for Economic Development
5 Atlantic Quay
150 Broomielaw
Glasgow
G2 8LU