EU lawyers are warning the European Commission plans to exempt the UK from a continent-wide regulation aimed at tackling banks that are too big to fail “is not compatible” with EU law, according to reports.
The European Commission’s approach will curb proprietary trading and give regulators the power to hive off some types of riskier trading.
In the UK, the Vickers’ proposals – which were approved by the House of Commons last December – will ringfence retail banks and require them to have a separate board.
In response to concerns from the UK, the Commission included in its proposal a “derogation” to permit other models for separation, including the UK’s approach.
According to the Financial Times, in an opinion circulated on Monday, Council lawyers conclude the Commission’s derogation mechanism “is not compatible with the legal basis of the proposal, with the nature of the proposed instrument as defined in the [EU treaties] and with the general institutional principles established in the treaties”.
It says the exemptions would mean the rules were not fully and uniformly applied across member states, as required by European regulations.