EU bank rules will not affect taxpayers
Published 03/12/2009 | 08:00
Tough new European controls on banks and finance houses will not affect British taxpayers, Chancellor Alastair Darling has insisted.
He said the Government had agreed the setting up of EU-level supervisory authorities in the wake of the economic crisis - as long as they did not "impinge on the fiscal responsibilities of the member states".
In other words, a draft accord reached at talks between EU finance ministers in Brussels prevents any of the new bodies forcing a national government to bail out its banks.
Mr Darling told a press conference that the condition had been a British "red line", adding: "Responsibility for regulating financial institutions has to reside in the (UK) Financial Services Authority."
He said it was essential that the work of national financial regulators should be complemented by arrangements to deal with any cross-border issues or risks that may arise.
"Today's deal says that no decision these authorities adopt impinges in any way on the fiscal responsibilities of member states," said Mr Darling.
"That was critical wording, and crucial to us: the UK very much supports this agreement, which I believe will go a long way to tighten up the regulatory position."
The draft deal, which still needs approval from the European Parliament, sees the creation of three new European supervisory authorities (ESAs) for the monitoring of financial services across the EU.
They are a European Banking Authority, a European Insurance and Occupational Pensions Authority and a European Securities and Markets Authority.
The three will be part of a European System of Financial Supervisors, working in co-operation with national regulators.
A statement after the meeting said: "On account of the liabilities that may be involved for the member states, the general approach provides that decisions taken by ESAs would not impinge in any way on the fiscal responsibilities of the member states. Any binding decision taken by the ESAs would be subject to review by the EU Courts."
Pressed on whether the UK FSA could be answerable to pan-European regulators, the Chancellor replied: "The FSA is only answerable to the UK Parliament."
The Chancellor also issued a warning to other EU governments not to interfere with the competitiveness of the City of London.