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European Financial Services Proposals

Part of Oral Answers to Questions — Foreign and Commonwealth Office – in the House of Commons at 6:37 pm on 1st December 2009.

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Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Secretary, HM Treasury 6:37 pm, 1st December 2009

As I said, we are hoping to agree a general approach at ECOFIN. The process is ongoing, according to the timetable that I outlined. We are satisfied that article 95 of the EC treaty is an appropriate legal base for the new European supervisory authorities.

The hon. Member for Fareham asked whether the ESAs have the power to implement the ESRB recommendations on fiscal impacts. Those recommendations are an early warning system for action to protect financial stability that are addressed to member states, supervisory authorities and central banks. If there were a fiscal impact, such recommendations would not be addressed to ESAs but to member states themselves.

A question was asked about whether further discussions on proposals would be binding in relation to the European Council. Anything that is included in the final co-decided text will be binding. The text under discussion at ECOFIN is about the Council's position. If the European Parliament disagrees with something, an agreement on the exact wording will take place between the Council and the European Parliament, and at that point, it would be binding.

My hon. Friend Mr. Todd and Mr. Browne asked about the ESAs' decision-making process and whether we will have the same weight as other member states. We expect to exercise significant influence through the Financial Services Authority, because rule making is expected to take place under the weighted qualified majority voting procedure used in the European Council. That will ensure that the FSA has a substantial number of votes.

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