MPs call for more time on EC regulation
MEMBERS of Parliament have issued an urgent warning to the European Commission over plans to tighten Europe-wide financial regulation, branding them “a serious cause for concern”.
In a major report today the Treasury Select Committee said rushing in proposals to set up a macro-economic risk monitoring board and several industry-specific watchdogs would be “a recipe for a muddle”.
The EC hopes to lay the foundations of the European Systemic Risk Board and three European Supervisory Authorities as early as December. Designed in the wake of the financial crisis, the ESRB would be an “early warning” alarm for the financial system while separate ESAs for banking, securities and pensions would work with national regulators on micro-prudential issues.
Lord Myners said he was prepared to use his power of veto to block the legislation. He is concerned ESAs would have the power to order the UK to make fiscal decisions in times of emergency, something he told the committee “could have a chilling consequence”.
There are also question marks over the legal status of the new bodies and their ability to override the FSA to interfere with individual firms.
John McFall, committee chairman, said: “While the intention of the European proposals is widely welcomed, there is a great deal of unease about the detail.”
He said: “We consider pushing for agreement by 2 December is far too fast… there should be proper time for consideration, otherwise this could end up as a recipe for a muddle.”
However McFall warned the financial industry not to take his words as a signal to return to “business as usual”.
His comments came as the backlash mounted against European Union plans to force hedge funds to defer up to 60 per cent of managers’ performance-related pay. Hedge fund houses are furious at a draft Alternative InvestmentFund Managers directive which suggests at least 40 per cent of managers’ variable remuneration should be held back for three years, pointing out such measures were aimed at banks.