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European Financial Services Proposals

We welcome the chance to debate these important proposals. They will have a significant impact on the regulation of the financial services sector, and they have the potential, notwithstanding the Minister's comments, to impact on our fiscal policy. Let us be clear, however, that we are here only because the European Scrutiny Committee called for a debate on the Floor of the House. The Government have not conceded these proceedings voluntarily. They did not set aside this time because they felt it important to debate these issues; they were required to do so by the Committee. It asked for a three-hour debate on the Floor of the House, and that signal should not be underestimated. The Committee has done so on only a handful of occasions during the lifetime of this Parliament. The issue is clearly important, and it is right that we have this debate in advance of the ECOFIN meeting tomorrow. We recognise the importance of cross-border supervision. We have had arguably the first global regulatory crisis, and we need to learn lessons about the need for greater co-ordination and standards of supervision. However, despite the global nature of the crisis, the bill for failure was picked up by national taxpayers, and we need to bear that in mind as we debate the subject. The UK boasts a leading global financial centre. The importance of global co-ordination should not be understated, but, when considering the issue, we must engage much more vigorously in the debate. That is not about stymieing attempts at reform, but about working towards a more effective and stable system. That will benefit the UK and the wider European Union, and we recognise that some changes are necessary to resolve some issues that the financial crisis threw up. However, we find the Government's approach passive and complacent. They need to be proactive and strategic, rather than complacent and tactical. Such an approach represents a misunderstanding of the importance of what is at stake, and the consequences of the Government's rather casual approach could be significant. We have seen the consequences of that approach already. This year, we had the publication of the alternative investment fund managers directive, and there has been widespread criticism of it and its impact not just on hedge funds and private equity, but on other forms of funds affecting other European countries.