MEPs split on financial sector regulation

New findings from Cicero Consulting and ComRes show that EU parliamentarians would like to see greater regulation of the financial services sector

but they are split on whether the EU needs to become more politically integrated in dealing with future financial crises.

In advance of this weekend's European Parliament elections, new findings from Cicero Consulting, the leading financial services public policy specialists, and ComRes, the leading online polling organisation, show that EU parliamentarians would like to see greater regulation of the financial services sector but they are split on whether the EU needs to become more politically integrated in dealing with future financial crises.

Key findings: MEPs largely blame the US for the current crisis: 49% laid the blame specifically at the door of the US banking sector.

Alternative investment funds came in for little attention though MEPs did single out the role of hedge funds.

25% of MEPs blames hedge funds compared to just 6% citing the role of private equity funds.

Nearly two-thirds of MEPs cited the role of Anglo-Saxon light touch financial regulation as a causal factor.

However, this fell to less than half of those MEPs representing the UK and Ireland.

Only 2% thought that the institutional investors should have exercised greater responsibility.

MEPs would like to see banks and other financial institutions required to hold greater capital in future while limiting the role of debt financing.

This signals a potential return to more old-fashioned approaches where financial institutions are more risk-averse and more reliant on their own balance sheet to fund operations.

Overall, 66% of MEPs favoured deeper political union to help overcome similar financial crisis in future.

However, again we see a divergence between MEPs with only 21% of MEPs in the UK and Ireland supporting this approach.

The poll was carried out between 16th February and 31st March 2009 among 112 current MEPs.

Mark Twigg, director at Cicero Consulting, said: "With the contraction in credit, the banking collapse seeing large amounts of public money injected in the financial system, and the tax payer now being seen as not only a major stakeholder but shareholder the relationship between sector and state has fundamentally altered and the way in which the sector influences public policy has fundamentally changed" Andrew Hawkins, chief executive of ComRes, said: "This research outlines where the current Parliament lays the blame for the current financial crisis, and how it should be addressed.

With the social contract between the financial services sector and Governments at all levels being rewritten, it is now more essential than ever to understand the political insight of Members of the European Parliament, with the majority of the new raft of legislation emanating at the European level.

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