Financial crisis inquiry launched

The Committee held an evidence session on this issue with Lord Turner of Ecchinswell, Chairman of the FSA and Lord Myners, Financial Service Secretary to the Treasury in late November and are now inviting written evidence on the EU proposals. The Committee’s call for evidence is published in their report on their meeting with Lord Turner and Lord Myners.

• European Commission’s proposals for dealing with the current financial - Inquiry Call for Evidence (PDF)
• Report: EU Legislative Initiatives in Response to the Financial Turmoil
• House of Lords EU Sub-Committee on Economic and Financial Affairs, and International Trade

The Committee will focus on four key issues raised by the European Commission’s proposals. They are:

• Commission legislation to implement a prudential European financial regime – Will this be effective in preventing a repeat of the current financial turmoil? Will new rules on credit ratings agencies and changes to the Capital Requirements Directive help or simply encourage financial institutions to relocate outside of the EU?

• The future role of the European Supervisory System – Do we need a central European authority to supervise the activities of pan European financial institutions?

• The effectiveness of European institutions in responding to the current financial crisis – Did they act rapidly enough? Do these events signal the need for reform of European institutions?

• The role of the EU in the global response to events – Is their a need for a global supervisory system? What role should the EU and existing financial institutions such as the IMF play in any new system?

Commenting Baroness Cohen, Chairman of the House of Lords EU Sub-Committee on Economic and Financial Affairs, said:

"The current financial crisis has been a major test of the EU’s ability to react to worldwide economic events. Now, as the effects of the banking crisis and credit crunch begin to be felt in the wider economy, is the right time to assess what progress the EU is making.

"We are keen to explore whether the proposals put forward by the European Commission are the right ones to prevent a repeat of the current turmoil. There is now a consensus that regulation of financial industries needs to be improved across the globe, are the EU’s efforts a step in the right direction toward that?

"We would welcome written evidence from any interested parties and will begin to take oral evidence in January on what is a vital issue for the future of Europe and the UK."