Row over Frankfurt power grab
A CRUNCH vote on sweeping changes to financial regulation in Europe has been delayed amid accusations of a secret attempt to shift power from London and Paris to Frankfurt.
The European Parliament has pushed back a decision on the workings of three super-watchdogs until September after 11th-hour tweaks to the legislation caused a furore among member states. Amendments slipped into the document last Thursday include moving the headquarters of all three super-regulators to Germany, away from Britain and France, and giving the new entities power to overrule their local counterparts such as the Financial Services Authority or the Bank of England.
The trio of agencies will control oversight of Europe’s banking, insurance and financial instruments industries. They have been the subject of controversy since they were unveiled by the European Commission (EC) last year.
Sven Giegold, a German MEP involved in negotiations between the parliament and individual countries, said the session had been postponed to allow more time to thrash out how much authority the super-watchdogs would have. However, it is understood the parliament will still effectively rubber-stamp the meat of the text today – including the push to create a regulatory hub in Frankfurt.
Godfrey Bloom, a UK Independence Party MEP who joint-coordinates Brussels’ economic and monetary affairs committee, said: “This is a fundamental movement of regulation away from the UK. Europe wants to break the power of the City of London and this is all part of that strategy.”
A Treasury spokesperson said the government opposed the European parliament’s attempt to move the planned banking super-regulator from London to Frankfurt.
Andrew Tyrie, the Conservative chair of the Treasury select committee, added: “Britain has massive interests in the way the City is regulated from continental Europe. It is vital the coalition government fights its corner as it promised in the election.”
Syed Kamall, a Conservative MEP, said there was still time for Britain to negotiate the ability to veto super-regulators in extreme circumstances.
The spat over quiet alterations to the financial reform law will fuel concerns a rushed lawmaking process will damage the Square Mile. José Manuel Barroso, head of the EC, has set a tough deadline of next January to have the system of super-regulators up and running.
He said yesterday: “It would be very difficult to explain to our partners in the G20 that we who were the first to start the process [of overhaul] cannot be the first to complete it.”
Additional reporting: David Crow