Tidal wave of European rules to engulf City

Callum McCarthy has used his maiden speech as chairman of the Financial Services Authority to warn of a potential crisis being threatened by a deluge of Europe regulation.

"The financial services industry faces, over the period 2004-2008, the task of implementing more than 14 major EU legislative measures," Mr McCarthy warned at the European Policy Forum in Ditchley Park, Oxfordshire, yesterday.

Each will require new IT systems, staff training, changes in managerial responsibilities and possibly the hiring of external consultants. He added that "according to our analysis, there will be particular implementation pressure peaks in 2004 and 2006."

Theregulations come from the Financial Services Action Plan, drafted by a committee headed by Belgian banker Alexandre Lamfalussy and aimedat harmonising and tightening European securities regulations.

Mr McCarthy said he was not opposed to the plan's thrust, but felt the implementation had not been thought out properly and called for a rethink of the timing and deadlines. The speech is understood to be a warning to the City, which Mr McCarthy believes has yet to realise the massive workload these directives will entail.

A former merchant banker and ex-director general of electricity regulator Ofgem, Mr McCarthy took over as chairman of the FSA from Sir Howard Davies last month.