UK Parliament / Open data

Credit Institutions and Investment Firms

Proceeding contribution from Chris Leslie (Labour) in the House of Commons on Tuesday, 8 November 2011. It occurred during Debate on Credit Institutions and Investment Firms.
My hon. Friend may well be correct. ““Who knows?”” is the ultimate question, but his cynicism has been proved right in the past and may well be right today. The motion is a sensible assessment, and asking the Clerk to send a reasoned opinion to the presidents of the European institutions is absolutely right, but what happens next? Will the Minister set out in a little more detail the consequences of today's motion, and whether we would have any prospect of shaping our own financial regulatory agenda if, indeed, many of the changes in the directive went through regardless of the opinion that we sent? The mismatch between the Commission's view and the UK's position is only the tip of the iceberg or, to use a better metaphor, only the beginning of the story. I am afraid to say that the Government's proposals for financial regulation have not been properly thought through and clash so much with European regulatory arrangements that they just will not be able to stand up adequately to their strength and power. Ministers knew very well that the EU supervisory institutions would be split across thematic groups around banking, pensions and insurance, and markets. Yet according to the Minister's legislation, we are choosing to split our arrangements between prudential and conduct regulation. I agree completely that we need a greater focus on prudential regulation, but there is a growing risk and increasing evidence that our UK institutions may leave us in a tangled mess unable to engage effectively with those very powerful EU structures. That concern is shared not only by Opposition Members, but across the City and other financial service sectors. If our voice is not adequately heard, we may be unable to be represented properly in the right meetings at the right time. It is not just the Opposition who are saying that. Last year, the Financial Services Consumer Panel said that"““the current European structure under the ESMA would be a poor fit with the proposed new UK arrangements and that this could potentially weaken the UK's voice in the European Union.””" In September, the British Bankers' Association said that"““little has been related on how the regulators will go about ensuring…that UK representation around the European table is second to none. There has not, for example, been acceptance of the suggestion made by the industry that consideration be given to maintaining a single international secretariat across the relevant authorities as a common shared service and the establishment of cross-authority teams to ensure that UK representatives at the three European Supervisory Authorities and other European and international committees are in a position to draw upon all relevant expertise and knowledge.””" The Association of Independent Financial Advisers—incidentally, I am attending its annual dinner this evening—said in September:"““The AIFA is concerned that the twin peak approach to UK regulation is not consistent with the developing European sectoral approach. We must ensure that the UK system is able to efficiently interact with the European system and does not lead to significant confusion for regulated firms and cost inefficiencies, or damage the competitiveness of the UK.””" Indeed, two weeks ago, the Chairman of the Treasury Committee, the hon. Member for Chichester (Mr Tyrie), said in a letter to the right hon. Member for Hitchin and Harpenden (Mr Lilley):"““How will the PRA and the FCA co-ordinate their interaction with the new European Supervisory Authorities which do not neatly match the twin-peaks model—particularly where both financial stability and consumer protection outcomes may be considered together at an EU level? With an enormous amount of EU legislation under way, how will the EU regulatory authorities ensure that UK interests are represented with one voice?””" So there has been a barrage of anxiety about the Government's proposals and how the design of their domestic regulatory arrangements will fit with those European supervisory structures. The Minister has time to think about those matters before introducing the Bill. If we try to persuade EU regulators to comply with our approach to financial regulation retrospectively, it will genuinely be like shutting the stable door after the horse has bolted.
Type
Proceeding contribution
Reference
535 c200-1 
Session
2010-12
Chamber / Committee
House of Commons chamber
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