Page last updated at 12:34 GMT, Wednesday, 2 December 2009

Hands off City, Darling warns EU

City of London skyline
Mr Darling said Europe must not hamper the City's leading position

Chancellor Alistair Darling has warned against more European Union regulation of the UK financial services industry.

Writing in the Times ahead of a meeting of finance ministers in Brussels, he said giving the EU extra powers in the City would be a "recipe for confusion".

He said national regulators such as the UK's Financial Services Authority must retain their supervisory roles.

A debate on the extent of EU regulation comes as France's Michel Barnier starts as Single Market Commissioner.

In a speech on Tuesday, French President Nicolas Sarkozy suggested Mr Barnier's appointment heralded the victory of the European model.

The reality is the real competition to Europe's financial centres comes from outside our borders
Alistair Darling

Mr Darling is expected to warn other EU finance ministers he will not accept new powers for European authorities to take decisions on future bail-outs for which British taxpayers might have to pick up the bill.

In the Times he writes: "Regulatory reform throughout the world is imperative, and Europe, home to the world's largest single market in financial services, has a particular responsibility."

He said: "We must resist measures, however superficially alluring, that could undermine the effective functioning of our cherished single market.

"National supervisors, such as the FSA, must remain responsible for supervising individual companies. Making companies directly accountable to more than one authority is a recipe for confusion."

Mr Darling said London should not be seen in the same way as other European financial centres.

"The reality is the real competition to Europe's financial centres comes from outside our borders. And that London, whether others like it or not, is New York's only rival as a truly global financial centre."

New regulators

European finance ministers are meeting in Brussels in the hope of securing a deal on new pan-European regulation of the financial sector.

Under plans drawn up by the European Commission, three new supervisory authorities will be created to oversee banks, insurers and investment firms.

A separate body, known as the European Systemic Risk Board, is planned to oversee the wider stability of the European financial system as a whole.

It will be led by European central bankers and national regulators.

The proposals were drawn up following the financial crisis which occurred in the wake of the collapse of Lehman Brothers more than a year ago.

The European Commission has said it hopes to see the new pan-European system established in the new year.

However, that will depend on finance ministers and the European parliament both coming to an agreement on the plans.

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