18 November 2009

UK Treasury Committee raises concern about over-hasty pace of European financial regulation

British lawmakers urged the government to reject European Union proposals to centralize financial services regulation, saying they have been rushed through and are not clear on areas such as fiscal sovereignty.

Following an urgent inquiry into the European Commission’s proposals for Macro and Microprudential Financial Regulation, the Treasury Committee publishes its report: The Committee’s Opinion on Proposals for European Financial Regulation. The proposals are due to be discussed at the ECOFIN meeting on 2 December. The House of Commons European Scrutiny Committee has recommended they should be debated on the floor of the House before then. This Report, prepared at the request of the European Scrutiny Committee, is intended to inform that debate.

The Committee concludes:

Reaching agreement on such an ambitious package in less than three months is extremely ambitious; we believe it is over-ambitious. Even though there is a consensus that reform of the European financial institutions is needed, that reform needs to be carefully established; it is better to be right than quick. We have identified serious problems with the Commission’s proposals which need to be dealt with before the Council ages to the draft legislation and it moves on to the next stage.

John McFall, Chairman of the Committee, said:

“The banking crisis, which began some two years ago and is still playing out today, has prompted calls for new systems of international regulation. Indeed, our Committee has been vociferous in those calls. The collapse of the Icelandic banking system and the devastating impact it had on British savers is proof that we need new Europe-wide arrangements that promote financial stability across the EU and EEA.

“However, 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 Presidency is pressing for adoption of the proposals by ECOFIN on 2 December. We consider that 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.”

 Full report

 

© United Kingdom Treasury