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Kim North
Brussels seizes regulatory power
As we start preparing for the festive season, it is a busy time not just for Santa but also for European regulators.
The Financial Services Bill was published on November 18 addressing regulatory issues that, in my mind, needed to be fixed. The bill includes the Walker review on corporate governance, recovery and resolution plans for regulated companies, tightening the rules about what the FSA can do to prohibit or require disclosure on short-selling, new FSA powers to discipline regulatory breaches, introduces an alternative to the Financial Services Ombudsman and changes to the Consumer Credit Act 1974 so customers can no longer be sent unrequested credit card cheques.
Now you may wonder if this bill will ever become law for the Conservatives are riding high in the opinion polls and have said they are likely to scrap the FSA and give power to the Bank of England.
This potential change of Government has done nothing to halt the FSA’s recruitment. They have just appointed five new senior advisers who will assist the FSA in its work on governance issues.
These advisers will provide input on developing the FSA’s regulatory framework for ensuring effective governance in financial institutions and will also contribute to the panel interview process for individuals wanting to take up major board positions in the UK’s biggest financial institutions. As part of its new intensive approach to supervision, the FSA has made clear it is now seeking to judge competence as well as probity with regard to individuals holding significant influence functions.
If I worked in the FSA, I would have a box under my desk ready to pack up and leave but the news last week that Brussels was given huge powers over the European financial services industry would make me contact recruitment agencies.
There is a new EU internal market commissioner, Michel Barnier, who heads the main EU supervisory authority, with three smaller authorities set up in London to regulate banking, in Frankfurt for insurance and pensions and Paris for securities. The FSA will only be able to reject an order from the EU supervisory authorities if it gets agreement from the other 26 EU states.
The decisions emanating from “les trois agencies” will have more impact on UK financial services than those made by the British Government. Well that’s the view of The Telegraph and I have to agree.
Why should I bother being concerned about the land grab of financial services regulatory power by Brussels? What if the lowest common denominator standards are set across the EU? What if London looks less attractive and can no longer compete with New York. Look at Wikipedia: “The UK is one of the world’s most globalised countries. The capital, London is a major financial centre for international business and commerce and is one of four command centres for the global economy (along with New York City, Paris and Tokyo).”
I am proud to work in the UK financial services industry, it is one of the best in the world and contributes over 10 per cent of Britain’s GDP, of which 42 per cent of this value is generated from London. I believe this shift of power to Brussels could seriously affect UK financial services for the worse as large companies may choose to move overseas.
Merry Christmas to you all.
Kim North is director of Tech and Tech
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