71 Financial services
| (31694)
10822/10
COM(10) 301
| Commission Communication: Regulating financial services for sustainable growth
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| Legal base | —
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| Document originated | 2 June 2010
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| Deposited in Parliament | 11 June 2010
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| Department | HM Treasury
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| Basis of consideration | EM of 17 June 2010
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| Previous Committee Report | None
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| Discussion in Council | 6 June 2010
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
71.1 Since the inception of problems in the financial services
in 2008 the Commission has proposed a range of temporary and permanent
responses, many of which have been or are being adopted. Some
of the most important of these proposals relate to changing the
regulatory and supervisory regimes for the financial services
sector.
The document
71.2 In this Communication the Commission says that its aim is
for a safe, sound, responsible and transparent financial services
sector targeted at serving the real economy and that it intends
to deliver various proposals, informed by consultation and impact
assessment, over the next nine months. It also highlights the
need for an assessment of the cumulative impact on the financial
sector of the regulations. It then very briefly reviews actions
already completed and outlines the need it perceives to complete
regulatory and supervisory change by the end of 2011.
71.3 The Commission next lists proposals currently
under discussion which it urges the Council and the European Parliament
to adopt very soon:
- the new EU supervisory architecture
consisting of a European Systemic Risk Board and three European
Supervisory Authorities;[304]
- the draft Alternative Investment
Fund Managers Directive;[305]
and
- the third revision of the Capital
Requirements Directive, related to remuneration and capital requirements
for trading book positions.[306]
71.4 In the third section of the Communication the
Commission identifies four themes for the financial services legislative
proposals it plans — 'enhanced transparency', 'effective
supervision and enforcement', 'enhanced resilience and stability
of the financial sector' and 'strengthened responsibility and
consumer protection.' The matters the Commission plans to address
in the next nine months are:
- in relation to enhanced transparency,
the need for greater transparency for supervisors, investors and
the general public, with work on credit rating agencies, derivatives
markets and improvements to the Markets in Financial Instruments
Directive as intrinsic to this;
- in relation to effective supervision and enforcement
and the supervisory architecture, the need for revision of the
Credit Rating Agencies Regulation to give direct oversight of
these agencies registered in the EU to the European Securities
and Markets Authority and a Communication on greater harmonisation
of sanctions in the financial services sector;
- in relation to enhanced resilience and stability
of the financial sector, the need for amendments to the Capital
Requirements Directive to improve the quality and quantity of
capital held by banks, to introduce an effective liquidity regime
and capital buffers and to address excessive reliance on leverage,
the need for greater resilience for central counterparties clearing
over the counter derivatives, the need for a better crisis management
framework, the need for tools for prevention and resolution of
failing and failed banks and the need for global convergence around
one set of accounting standards; and
- in relation to strengthened responsibility and
consumer protection, the need for restoring consumer and investor
confidence in financial markets, with measures to tackle naked
short selling and excessive speculation on credit default swaps,
revision of the Market Abuse Directive, the Deposit Guarantee
Scheme Directive and the Investor Compensation Schemes Directive,
a White Paper on Insurance Compensation Schemes, proposals on
Packaged Retail Investment Products and revisions to the Undertakings
for Collective Investments in Transferable Securities Directive
depositories function.
71.5 The Commission concludes the Communication by
reiterating the need for:
- well calibrated and proportional
regulation, agreed in consultation with industry and stakeholders
to ensure that economic growth is not stunted and that pro-cyclical
effects are limited; and
- prompt action, with the final pieces of legislation
adopted by the end of 2011, where possible with global convergence
of standards.
The Government's view
71.6 The Financial Secretary to the Treasury (Mr
Mark Hoban) notes that the Communication is a summary of the Commission's
workplan and says that it has no policy implications.
Conclusion
71.7 As the Minister says this Communication merely
outlines a Commission workplan. And we agree that of itself it
has no policy implications. But, given the importance of the financial
services sector and of the measures that will come forward, whilst
clearing the document we draw it to the attention of the House.
304 (30950)-(30957) 13648/09-13657/09: see HC 19-xxviii
(2008-09), chapter 6 (21 October 2009), HC 19-xxx (2008-09), chapter
2 (4 November 2009) and HC 5-i (2009-10), chapter 2 (19 November
2009) and HC Deb, 1 December 2009, cols 990-1030 and (31088)
15093/09: see HC 5-i (2009-10), chapter 1 (19 November 2009 and
HC Deb, 1 December 2009, cols 990-1030. Back
305
(30624) 9494/09 + ADDs 1-2 (31089) 15162/09: see HC 19-xviii (2008-09),
chapter 9 (3 June 2009), HC 19-xxii (2008-09), chapter 3 (1 July
2009), HC 5-vi (2009-10), chapter 2 (13 January 2010 and Stg
Co Debs, European Committee B, 23 February 2010, cols 3-28. Back
306
(30802) 12093/09 + ADDs 1-2: see HC 19-xxvi (2008-09), chapter
8 (10 September 2009), HC 19-xxvii (2008-09), chapter 8 (14 October
2009) and HC 5-ii (2009-10 ), chapter 13 (25 November 2009). Back
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