UK expects “satisfactory” deal on new EU watchdogs

November 4, 2009

A video grab image shows Britain's City minister Paul Myners speaking at a Treasury Committee in London March 17, 2009.      By Huw Jones
LONDON, Nov 4 (Reuters) – Britain said on Wednesday it expects a satisfactory deal on setting up new European Union watchdogs for banks even though a key decision by the bloc’s finance ministers is less than a month away.

Britain succeeded in delaying the EU plan in October because it feared the new bodies would be able to overrule its national regulators too easily.

“I am confident we will secure a satisfactory outcome,” British financial services minister, Paul Myners, told the UK parliament’s treasury committee.

EU finance ministers are due to try again to reach a political agreement on the new bodies when they meet at the start of December.

The EU’s executive European Commission has drafted a law to set up three new pan-EU banking, insurance and securities authorities with binding powers over national watchdogs.

They form a core part of the bloc’s response to the financial crisis by having more consistent supervision.

But the Commission has “gone further” than EU leaders agreed in June when they said the bodies cannot take binding decisions that affect public finances, such as forcing a bank bailout.

“There can be no interventions that have fiscal consequences,” Myners said.

“I am confident that the agreement reached by the European Council in June will be reflected in the final outcome.”

Britain, as home to Europe’s biggest financial centre, wants two key aspects of the draft law changed — how appeals by a member state against a binding decision are handled, and new powers conferred on the Commission.

Under the draft, Britain would need to get the support of two-thirds of EU states to scrap a binding decision. It wants this reversed so that a binding decision would need two-thirds backing to survive an appeal.

It also wants to scrap a proposal that would allow the Commission to declare an emergency, thereby ratcheting up pressure on a country to take action.

“I cannot conceive a situation where the Commission is the natural body to decide on this,” Myners said.

Myners could not give “cast iron” guarantees that Britain can change the draft law as it has no veto.

The EU’s 27 states and European Parliament have the final say on the draft law that will also set up a new pan-EU body to monitor risks across the financial system.

There are also concerns the three new authorities are being built on shaky legal grounds as they ultimately depend on the European Commission’s authority under the EU treaty.

“We must have a robust framework that reduces the areas and risks of challenges,” Myners said.
(Reporting by Huw Jones, editing by Ron Askew)
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