Howard Wheeldon writes: When Gordon Brown was on yet another expensive globe trotting mission to save the world ahead of the London G20 meeting you could be sure of one thing – he wouldn’t be pushing what is best for Britain. No, instead Mr. Brown was no doubt aspiring to play at being statesman again persuading those coming to London to reach some kind of consensus, to speak in harmony with one voice plus repeating calls for others to create greater fiscal stimulus. Talking shop it may be and playing to a distinctly worried global gallery, but it is in our interests that something useful comes out of the G20 meeting. We all desire that but what we will not contend with are attempts by Brown to sell the UK short placing already vulnerable banking and financial markets into EU or later perhaps, global regulatory control.

Before heading off on a tour that takes in France, the US , Chile and Brazil our hapless Prime Minister apparently met with the senior executives of some of the world’s largest banks. Regulatory reform was apparently the main issue under discussion the need to ensure better risk management, governance and more sound policies of compensation. Not really surprisingly, there appears to have been broad agreement on the need for reform.

No doubt the Prime Minister was also protesting to the assembled gathering that Britain was taking a lead pushing for some kind of ultimate global wide regulation of banks though I guess, with some British banks and institutions present, he was far more careful pushing the point that ahead of faint chance of ever achieving a global regulatory regime that all would sign up to, the UK would be supporting various European Commission regulatory proposals and initiatives that would in effect surrender any regulatory control that we currently have. Is that what we really want – is that what we should be imposing on British based commercial and investment banks and financial markets as a whole – would such proposals be in the best interests of Britain? The answer to that is a definite ‘no’!

Last month the European Commission threw its weight behind far- reaching proposals put forward by former Bank of France Governor, Jacques de Larosier. Measures include more stringent bank capital rules, more transparency in markets such as derivatives, penalising banks whose remuneration policies encourage excessive risk taking. I have no issue with certain of these proposals though what I seriously object too is the introduction of a pan-EU supervisory authority, under the auspices of the European Central Bank that would apparently act as the figurehead organisation to warn national regulators, including Britain, when threats to stability in the various financial services industry occur. Worse is that, without any prior consultation, a second pan-European authority would be set up that would monitor day-to-day supervision of banks, insurers and markets. This is totally unacceptable.

In a letter published in The Times published on the 27 February, Bill Cash, Member of Parliament for Stone, Staffordshire wrote that “it is clear that [if any such proposals are accepted as law] any such regulation at a European level will be subject to majority voting. This would inevitably mean that the UK financial services and banking arrangements would be run on lines dictated by the interests of other countries rather than our own national interests”. This as Cash says, must be resisted at all costs. Cash usefully reminds too that a recent report by Keith Boyfield indicated that the effect of the EU Financial Services Action Plan on the City of London may amount to as much as £23.5bn. He calls for a national debate on the subject and the strongest resistance to any European Commission plan that evolves.

In my view, we do not want nor do we need European interference in the running of OUR banks and financial markets thank you very much! The supremacy of Westminster on internal matters such as financial regulation must not be allowed to be overridden by EU lawmakers. As Cash said in his letter, “such European laws devised by an unelected European Commission, agreed by the Council of Ministers by majority vote and then, when problems occur, adjudicated by the European Court of Justice must not be allowed to be imposed on the UK”. I agree. Such laws are against the UK national interest and would seriously damage City of London pre-eminence in banking and financial services industries. Indeed, by giving over any power on regulation to the EU or EC Britain could be sounding the death warrant on its still powerful financial industries. Where would it end? I certainly doubt that it would end with just what is currently being proposed.

While there have been hints of disapproval to the EU/EC plan from Chancellor of Exchequer Darling it seems that the UK Financial Services Authority has fallen hook, line and sinker for the EU proposals. Given that Gordon Brown appears very content with the proposals and to pass over all responsibility and jurisdiction for banking and financial services regulation to the EU it is hardly surprising that FSA chair, Adair Turner should fall into line. He was after all appointed to the FSA by Brown and has long enjoyed close ties with the Prime Minister. True, for the most part the socalled Turner Review of Global Banking Regulations is only a discussion paper at this stage. Indeed, many proposals contained within the Turner paper are completely acceptable, warranted and should rightly become UK law. These include matters of improved governance, protection for depositors and liquidity stress testing for banks.

In part, the FSA is playing catch up and many of the new powers proposed are after all what should have been contained in law from the time the FSA was given responsibility for bank regulation on formation of the Tri- Partite agreement back in 1997. But throughout the Turner discussion paper one sees the nasty innuendo of support that ultimate control and responsibility of regulatory matters should shift to European control. My view on this is that if the UK banking and financial industry is to survive, prosper and to again resume its significance in the world such proposals must be resisted.

Another of the many concerns that I have as the regulatory debate widens on both UK and European paper proposals is how the Conservative Party will react. As the likely next party of government it is surprising that the party has so far been so quiet. What we think we know is that Shadow Chancellor Osborne is opposed to any EU interference on UK regulatory matters. However, it is my belief that Shadow Business Secretary, Ken Clarke is totally behind giving away control of regulatory matters to the EU. If right, the split in views may account for why the Tories have so far remained relatively quiet. Tory Party policy on this matter must be quickly resolved in favour of protection of UK wide interests. I repeat, we should not in my view and the view of many others in this industry give over control of anything that would affect our central ability to generate wealth.

Yes, there are many lessons to be learned by the failure of several UK banks and the failure to have adequate regulatory legislation in place that protects depositors and investors. Yes the government should be ashamed of itself for the complete failure to provide adequate regulatory provisions when it took away direct control of banking regulation from the Bank of England almost twelve years ago. Yes, the government and particularly Gordon brown should be shot for allowing a binge culture of borrowing to develop in order to claim artificial economic growth. I could go on but we should not allow a failed Prime Minister to now take the easy way out passing regulatory control for one of the prime industries left in Britain over to the EU or anyone else.

British banks and financial industries must stand firm against the Brown/Turner stance. Yes we need change, yes we need to take on board the lesson also learned by the rest of the world, yes we need radical change in regulation and control but we need to achieve that and to police it ourselves. At all costs we must protect our financial industries and markets and ensure that EU control over any part of our financial market affairs is resisted. Fail now and any competitive advantage we have left will fall into other control.