Securities committee at centre of power struggle

Date: 28/03/1996

By Tim Jones

PARLIAMENT is once again engaged in a protracted dispute with member states over the powers of committees.

The legal affairs committee is close to adopting a report by Socialist MEP Christine Oddy aimed at defending European Commission powers against what it sees as the encroaching Council of Ministers.

While previous so-called comitology disagreements have centred on committees of inquiry or infant-formula milk, this time the dispute focuses on technical adaptations to investment services directives.

At the beginning of the year, the EU ushered in a new era for the single market in financial services. From 1 January, the Investment Services Directive (ISD) took effect, allowing investment firms to offer cross-border services once they had a licence in their home state, while the Capital Adequacy Directive (CAD) established a common framework for the monitoring of market risks of investment firms.

A complex system of reporting was set up for banks; so complex that hardly any of them have even made the necessary software changes.

In these technical areas, the Commission and the Council have in the past frequently established expert bodies, such as the insurance or banking advisory committees, to approve any later changes to legislation.

This time was no exception and, in July last year, the Commission proposed the creation of a new securities committee to help manage and adapt the new investment services legislation.

The Oddy report recommends turning this body into a kind of 'management committee' where the Commission has the upper hand. She believes the 'technical adaptations' to directives envisaged for the committee under the proposal go well beyond what such a body should do, since they include alterations to capital levels and changes to take account of financial market developments.

“Parliament's position has always been that the Commission should, in the exercise of its implementing functions, be as free as possible from interference by the representatives of the member states,” says the Oddy report.

The squabble between MEPs and ministers goes back a long way and was meant to have been solved by a modus vivendi of December 1994. This latest episode shows that it remains unresolved. Meanwhile, the banking industry is waiting to see who will make the highly technical changes to legislation.