Morris, a partner at CMS Cameron McKenna, says the proposals for regulatory reform in the FSA’s 2009/10 business plan are “almost wholly of EU origin”.
He says the regulator has become less of a policymaker and more of an implementer and enforcer in the last two yearsMorris says: “As a domestic regulator, the FSA is subservient to an increasingly internationalised agenda. Only the detailed retail proposals contained in the plan are FSA’s own work.
“The FSA at the moment is largely, on the policy front, the implementer of the EU directives. If you look at Mifid, if you look at capital adequacy, if you look at the forthcoming insurance solvency, it is European-driven. The FSA has a limited policy role now, certainly on big picture matters.”
The FSA stressed in its business plan that one of its priorities for the coming year is to influence international regulation to deal with the financial crisis.
But Morris says the UK regulator will have limited power to steer a new regulatory agenda.
He says: “Yes, it is party to discussions as one out of 30 regulators but policymaking is out of its hands now. The big picture policy is all Brussels now.
“The FSA is a very well respected regulator in Europe but it is only one regulator out of 30 and I think we should rest assured that the other large member states, Germany and France in particular, will be very interested in manoeuvring so that London is a less powerful financial centre so there is a lot of politics here as well and I think that the FSA will find it will be caught in the crossfire, no matter how good its proposals are.”