Westminster and Brussels are set for another collision as MPs try to haul a recalcitrant EU commissioner before them for questioning.
Andrew Tyrie, the chairman of the Commons' powerful Treasury Committee, has appealed to the President of the European Commission to force Michel Barnier, the EU Commissioner for the Internal Market, to reverse his refusal to appear before MPs to explain his policies on the City.
Mr Barnier has offered to send an official, Jonathan Faull, instead. The MPs find this unacceptable. European commissioners have appeared before MPs in the past.
In his letter to Jose Manuel Barroso, Mr Tyrie states: "We are grateful for the offer, but it does not address the Committee's concerns. The UK has a very large proportion of the EU's share of global financial markets.
"The regulation of this sector is a matter for the commission at the highest level, all the more so since the banking crisis. Decisions taken by the commission will affect the UK more than any other EU state. I am asking you to ask Mr Barnier to reconsider."
Many in the financial services sector fear intrusive regulation, in stark contrast to the "light touch" enjoyed before the financial crisis. In particular, some in the City believe it is "impossible to have a conversation with Mr Barnier in any language". His predecessor, the Irishman Charlie McCreevy, is remembered much more fondly.
This week Mr Barnier turned his attention to the credit-ratings agencies, proposing that they tell a country three days in advance if they plan to downgrade its sovereign debt.
The former French politician took office earlier this year and has so far created four new regulatory authorities at the EU level: an advisory European Systemic Risk Board, plus three new bodies to oversee everything from derivatives trading to insurance and pension funds. The new bodies will have the authority to intervene and override national supervisors, such as the Bank of England and the Financial Services Authority, in cases where there is a dispute over a cross-border bank failure.
The European Parliament says that they are "watchdogs with a bite" and mark "a fundamental shift in the way banks, stock markets and insurance companies are policed as of 2011".
Mr Tyrie added: "This is of vital interest to Britain. The whole of Europe benefits because Britain has this success story, employing tens of thousands of people. Therefore, all regulators and legislators must work together to tackle the uncertainties and challenges facing the industry. We regret that Mr Barnier is not prepared to engage in a dialogue".
The EU is about to implement a new directive governing hedge funds and private equity, the Alternative Investment Fund Managers Directive. Although welcomed as an improvement on earlier drafts, the British Venture Capital Association continues to regard it as "flawed". Simon Walker, the chief executive of the BVCA, said: "The EU has taken a hostile interest in the wrong industry at the wrong time and for the wrong reasons".Reuse content