European regulation plans are overambitious, warn MPs
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The Treasury Committee has argued there is a danger that the European Commission’s plans for financial regulation could be rushed through too quickly, and risk handing too much power to European regulators.
In a report published today, the Treasury Committee say that it is overambitious of the commission to expect to reach agreement on its proposals with member states in less than three months.
The committee says that it has identified serious problems with the commission’s proposals which need to be dealt with before the European Council ages to the draft legislation and it moves on to the next stage.
John McFall, chairman of the committee, cites the collapse of the Icelandic banking system and the impact it had on British savers as “proof that we need new Europe-wide arrangements that promote financial stability across the European Union and the European Economic Area.”
He says: “But while the intention of the European proposals is widely welcomed, there is a great deal of unease about the detail, both within our Committee and from the evidence we received from outside.”
“There is still more unease about the timetable for agreement.”
The European Presidency is pressing for adoption of the proposals by the Economic and Financial Affairs on December 2.
McFall says this is “far too fast: the proposals will set in place a framework which should last for many decades, and there should be proper time for consideration, otherwise, this could end up as a recipe for a muddle.”
One of the committee’s concerns is how much power will be handed over to the European Supervisory Authorities.
The report highlights unease about the potential power these authorities will have to override the decisions of national regulators, and they will have additional power to direct national regulators.
It adds that not enough consideration has been given by the commission to the concern that any impending European financial regulation “should not impinge on the fiscal responsibilities of the Member States” and that this issue needs to be revisited.
But McFall says that although the committee has flagged up these concerns the financial services sector should not take this to mean that it is a return to lax standards of past regulation.
McFal adds: “Fears that political appetite for reform will fade are misplaced.
“The financial industry should not take our concern about these proposals as a tacit licence to return to business as usual.
“Far from it.
“We remain convinced of the need for more effective financial regulation and supervision; we simply believe it’s much more important to get it right than rush it through.”
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