UK REGULATORS will struggle to influence debate in Brussels due to the low regard with which they are held there, a close observer of European affairs has warned.
The insider told industry and political heavyweights at the Conservative Party conference that lobbying on issues like audit and financial services regulation will be tough as Brussels has “lost respect” for the UK regime.
Anglo-Saxon countries – Ireland, the UK and the US – are widely blamed for the financial crisis, the insider said, and their regulatory regimes are seen as having failed to prevent it.
The insider was talking at a roundtable organised by the Financial Reporting Council, where around 20 attendees debated UK regulatory issues in the context of a wider European framework.
Stakeholders are desperate to make their voices heard in Brussels after Michel Barnier’s draft green paper on audit was leaked last week, revealing a host of hard-line measures seemingly designed to turn the market on its head.
The insider said Barnier appears to be on a personal crusade against auditors, sticking to the radical proposals in his original consultation “with a few others thrown in for good measure” despite heavy criticism from industry and regulators across the Eurozone.
They called the draft paper “a serious retrograde step”, saying it is “worrisome” that despite widespread negative feedback, Barnier’s stance appears unchanged.
A recent European Parliament document detailing its expectations for audit reform – “modest” changes underpinned by rigorous cost-benefit assessment – was “completely and utterly ignored” said the insider, suggesting Barnier wants to be remembered for “being as bold as possible”.
And if regulators will be given short shrift in Brussels, the same could be said for commercial interests, according to another attendee. Industry lobbying “seems to have fallen out of favour” they observed, questioning how business could make its voice heard in a hostile political environment.
Stakeholders should speak early and speak loudly, the European observer advised, saying the fact that Brussels favours binding regulation rather than interpretable directives makes it even more crucial for the UK to build a shared agenda with other member states.
The UK’s reputation is so bad in Brussels that “anything really important” is submitted by “friendly member states and networks”, they said, revealing “we have no credibility”.
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A final version of the audit paper is expected next month and consultation in Brussels will probably end before Christmas, meaning we can expect conclusions early next year. With potentially substantial barriers to UK regulators and businesses influencing the debate, stakeholders will be hoping counterparts in other countries echo their concerns and are able to make their voices heard.