Compromises bring truce on comitology

By Anna McLauchlin

Date: 29/09/05

The thorny issue of the European Parliament's rights in EU lawmaking has been laid to rest for the time being, after a compromise was reached on two crucial financial services directives.

Yesterday (28 September), deputies backed a risk capital law for European banks (CRD) and new statutory audit rules, on the condition that after two years, any updates will require the agreement of all three EU institutions.

Until then, the current 'comitology' rules apply, under which the European Commission and Council of Ministers can make changes but should, under a gentlemen's agreement, give the Parliament the chance to review them.

The issue had threatened to delay both laws as MEPs were determined to secure similar rights to those that would have been granted under the EU constitution, where their right to review any changes to laws based on comitology would have had legal clout.

National government officials are currently looking at a proposal to review comitology law, which would dictate procedure for any laws, not just those in the domain of financial services.

The Council is now likely to adopt the CRD without the need for a second reading. MEPs made it easier for small- and medium- sized enterprises by ensuring that banks will have to explain their ratings decisions to smaller businesses and allowed German savings banks the same rights as international groups when loaning money to each other.

Guido Ravoet, secretary- general of the European Banking Federation, said that while the directive was not perfect it gave a "strong basis from which to move forward".

Bigger changes to the statutory audit directive may see it take a rockier path than the CRD.

The Parliament stripped out the requirement for companies listed on European stock markets to have a separate audit committee to oversee its accounting, instead leaving it to member states to decide. Listed companies would only have to change key audit partners every seven years rather than every five and MEPs decided not to force companies to change audit firms every seven years.

MEPs also asked the Commission to carry out a study on the impact of imposing EU liability rules on auditors.

David Devlin, president of the European Accountants Federation, said that he welcomed the vote and asked national governments to adopt the Parliament's text.

Article reports that a compromise was reached in the dispute between the Council and the European Parliament on MEPs' right to review legislation adopted under the comitology procedure. The Constitutional Treaty would give this right to the European Parliament. On 28 September 2005, MEPs backed the Capital Requirements Directive (CRD) and new statutory audit rules, on the condition that after two years, any updates would require the agreement of all three EU institutions.

Until then, the current 'comitology' rules were to apply, under which the European Commission and Council of Ministers could make changes but should, under a gentlemen's agreement, give the Parliament the chance to review them.

European Commission: Pre-Lex: COM(2004)486 http://ec.europa.eu/prelex/detail_dossier.cfm?CL=en&ReqId=0&DocType=COM&DocYear=2004&DocNum=0486

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