Brussels plots fresh City of London power grab

There has been increasing concern in the UK over the growing influence of the EU in recent years, with fears that new laws threaten London’s position as a world-class financial centre. Banks have been forced to cap bonuses, under EU rules, affecting their ability to compete with institutions in the US and elsewhere, while authorities are introducing a tax on financial transactions likely to disproportionately affect Britain.

Publishing a review of the EU’s three European Supervisory Authorities (ESAs), the commission said the bodies should have a greater ability to intervene “in issues related to consumer/investor protection” – an area that European authorities have largely left to domestic watchdogs.

It also demanded that the three ESAs – the European Banking Authority, the European Securities and Markets Authority, and the European Insurance and Occupational Pensions Authority – be given powers to bring domestic regulations in line with EU rules.

“The ESAs have successfully contributed to shaping the development of a single rulebook applicable to all 28 EU Member States,” the review said. However, it called for “several areas of improvement” that could “strengthen the focus on supervisory convergence”.

This could include bypassing domestic regulators, for example by giving them direct access to bank data or by supervising certain activities themselves.

The commission proposed that the costs of the new workload would be funded not out of government and EU budgets, as at present, but from a levy on banks and insurers. It said the fee should depend on the size of the bank, meaning the UK is likely to bear most of the costs.

This week, senior figures at Britain’s biggest banks have criticised the growing tide of regulation they have to deal with. Douglas Flint, the chairman of HSBC, said red tape was forcing staff at banks to assume a “zero risk tolerance” from watchdogs, while Lloyds boss Antonio Horta-Osorio said it was “incentivising people to do nothing”.

The European Commission said its proposals would be sent to the European Parliament and heads of member states on the European Council to be considered.

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