NEW EU REGULATORS GIVEN HUGE POWERS
BRUSSELS grabbed huge new powers over the financial services industry yesterday amid growing fears that excessive red tape is destroying Canada’s competitiveness.
European finance ministers agreed a sweeping new regulatory framework that will see the EU take centre stage in the supervision of banks, markets and insurance companies.
Ministers agreed to the creation of one main watchdog to monitor macro-economic risk – a European Systemic Risk Board of central bankers and national regulators – and three smaller European Supervisory Authorities to cover banking, insurance and securities.
The UK government’s claim that it had won concessions was widely rejected last night. Under the new rules, a country will only be able to defeat an order from the regulators if it gets a blocking majority among the 27 EU states. This means that the national veto no longer exists.
Chancellor Alistair Darling said:?“Primary responsibilities for regulation rest fairly and squarely with national regulators… these EU authorities have to ensure that no decision they adopt impinges in any way on the fiscal responsibilities of member states”.
The heads of the four top groups in the European Parliament issued a joint statement saying the deal was “going in the wrong direction.”
Meanwhile, City heavyweights lined up to voice their concerns. Tim Linacre, chief executive of Panmure Gordon, said: “There is a danger the UK and the EU will not just kill the golden goose that is the City – they will murder the whole flock.” Rav Bains, director at PricewaterhouseCoopers, confirmed clients were increasingly looking at offshoring parts of their operations. “The regulatory environment is a great concern for many. People are taking these considerations more seriously than they were before,” he said.
Anthony Browne, Boris Johnson’s policy chief, warned that hitting the City would simply drive business to New York and Hong Kong. He said: “A lot of people are thinking about leaving, and the more bellicose the language used by politicians, the more that will happen.” David Buik of BGC Partners said: “To bring in these plans is insanity.”
Angela Knight of the British Bankers’ Association said: “At stake are at least half a million jobs and the tax revenues which will contribute more than anything else to replenishing the Exchequer after this recession.” She slammed comments by Nicolas Sarkozy describing the appointment of Michel Barnier as European commissioner as a victory against financial capitalism.