Letter to the Clerk of the Committee and
memorandum submitted by the Corporation of London
As you correctly identified in your email, the
Corporation have taken, and continue to take, a keen interest
in the EU and Financial Services particularly in relation to the
implementation of the Financial Services Action Plan. To this
end the Corporation have sought to contribute to the evolving
debate in this area and in June 2003, submitted a memorandum to
the House of Lords European Union Sub-Committee B inquiry on the
Financial Services Action Plan. No doubt you will be already aware
of this memorandum and the Corporation's position as set out in
that paper remains largely unchanged.
More recently the Corporation has voiced its
concerns on the implementation of EU legislation having responded
to both the "Bellis Report" published by the Foreign
Secretary last year, and the Modernisation Committee's inquiry
into the Scrutiny of European Matters in the House of Commons.
So far as the City goes, there is a concern that the simplest
approach is not always adopted when subordinate legislation is
framed and this has the potential of reducing the City's competitiveness
in the Single Market. There is certainly an argument for greater
parliamentary oversight of both the formation of EU legislation
and its implementation insofar as financial services are concerned.
You may also be interested to know that the
Corporation have also responded in more technical detail to the
European Commission's FSAP Stocktaking exercise. Although formally
submitted by the Corporation the comments reflect widespread consultation
with a broad range of City practitioners and trade associations.
Further work is currently being undertaken in
this area and I think you have a copy of the recent work commissioned
by the Corporation from the European Policy Forum. I will certainly
ensure you get a copy of future research.
Corporation of London
OVER-ARCHING COMMENTS ON THE COMMISSION'S
FSAP STOCK-TAKING EXERCISE, SUBMITTED BY THE CORPORATION OF LONDON
1. We support the main thrust of the four
sectoral expert forum group reports, as summarised below.
2. There is a need for caution in proposing
new legislation beyond that already announced, especially those
items stressed as priorities in our separate responses on the
individual sectoral reports; all sectors are concerned by the
burden of the rising tide of EU legislation.
3. The quality of legislation matters more
4. It is premature to assess the impact
of FSAP but the Commission should monitor closely its implementation
and should not hesitate to initiate remedial action using all
appropriate means including enforcement of competition policy.
5. The Lamfalussy process must be given
time to bed down.
6. Retail markets will retain national characteristics,
beyond the scope of legislation, for some time; but discrimination
against foreign EU suppliers, whether cross border or via local
branch operations, resulting from public policy is unacceptable.
7. Consistent implementation and enforcement
is essential; requiring appropriate priority in the allocation
of [existing] Commission staff posts.
8. Non-legislative solutions should be sought
9. Any legislation should be based on clear
principles and objectives, prior consultation with those affected
with reasons given for Commission decisions, its benefits should
exceed its costs, it should attack clear market failure beyond
the scope of competition policy, it should be proportionate to
the problem it is intended to address, sufficiently flexible to
allow scope for dealing with new circumstances; we recommend that
the 12 Principles outlined for Securities Market Regulation are
adopted as guiding standards in the formulation of all EU financial
10. The principle of consultation is rightly
one which goes beyond the financial service sector, as recognised
in Art. I-11 of the draft Constitutional Treaty and the relevant
11. Supervisory cooperation should balance
the need for commonality/uniformity and flexibility; it should
based on best practice;
appropriate to the different risks
facing different market practitioners, users, customers; and
involve cooperation with market participants.
12. Legislation, regulation and supervision
should facilitate competition and innovation within a framework
of the principles set out above. The global context within which
European markets and financial institutions operate and provide
services should be recognised.