Britain’s financial regulator, fighting for its political survival, has reservations about European Union plans for more coordinated and strengthened regulation, a top Financial Services Authority official said.
National regulators must retain day-to-day supervision of banks if taxpayers in that country will still bail lenders out if they fail, said Verena Ross, head of the FSA’s international division, today at a conference in London. The European Union has proposed creating three regulatory bodies and giving them authority to decide disputes between national regulators.
“It’s very important to ensure that day-to-day supervisory responsibility remains aligned with the fiscal responsibilities that lie at member-state level,” Ross said.
Britain won a key concession before the formal EU proposals were drafted that the so-called supervisor of supervisors wouldn’t be able to make decisions that involved taxpayer money. In the U.K., the FSA’s future has been threatened by the opposition Conservative lawmakers. They have pledged to abolish the FSA should they win the next election, which must be held by June 2010.
“It’s a step too far to seek to intervene how a supervisor in one country seeks to discharge its responsibilities,” said Angela Knight, chief executive officer of the British Bankers’ Association, at the gathering.
The Financial Stability Board, a group of central bankers and financial regulators from the Group of 20 Nations, will be a crucial decision-making body at a global level, Ross said. It may be necessary to turn it into a formal treaty-based organization because it currently works on agreement and understanding, she said.
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