Commissioner defends EU regulatory powers
Michel Barnier, head of the European Commission for internal market and services, defended the legitimacy of the regulatory powers exercised by the EU body since financial crisis
“There are shocks buffeting from all directions. We need this,” he told members of the Treasury select committee, appearing before them for the first time, and referring to EU bailouts of Greece and Ireland that have occurred over the past year.
Mark Garnier MP, a Committee member, said past experience in the UK showed regulatory regime changes as a response to crises had only made subsequent crises more complex.
“Financial markets move very quickly, more quickly than is the basis of democracy,” admitted Barnier.
He said his aim was to “put in place instruments with sufficient flexibility to adapt to future crises”. The inclusion of a review clause made those powers flexible, he argued.
Legitimacy from the G20
He defended the extent of the Commission’s powers to draft regulation, saying that derived from the G20. “My agenda is essentially the G20 agenda,” he said.
Yet when probed as to how many of the initiatives proposed directly flowed from that power, he said “approximately two thirds”.
The Commission has come under criticism recently from financial services representatives for drafting broad-sweeping regulations affecting a number of industries, and for issuing several complex regulations at once.
But part of Barnier’s defence came from comparing measures taken by the European Commission to that of the US, which is implementing its own set of regulations with the Dodd-Frank reforms.
He said the Commission has covered about half of what Dodd-Frank does.
“We need to ensure a level playing field with the Americans,” he said.
Barnier also vowed it was not his intention to undermine national regulators. “My role is to ensure national authorities work together,” he said.
Referring to earlier responses to the crisis by individual Member States, he said “we saw chaotic measures being taken”, raising concerns about protectionism.
But the Commissioner was adamant he did not want to see individual European regulators being “replaced or supplanted”.
Not against the regulators, with them
The Commission was “not against them, but with them,” he said.
An influential member of the Committee, Michael Fallon MP, meanwhile suggested the regulators were being stress tested rather than the system.
Recently, Ugo Bassi, Barnier’s number two at the Commission, came under fire from representatives of the UK, French, German and Luxembourg regulatory bodies, who raised concerns about the timeframes they have been given to implement directives flowing from the EU, and how those will work in practice in their own countries.
They condemned the lack of proper consultation with industry over the Alternative Investment Fund Managers Directive (AIFMD), and said there were lessons to be learnt.
Barnier admitted yesterday the Commission was “working on the lessons to be learnt” from the regulations it has proposed, particularly around banks and their liquidity issues.
“It is not the thermometer which creates the fever, but you have to ensure the thermometer is working properly,” he said.