Britain's Darling warns on EU finance crackdown

(LONDON) - Britain's finance minister warned Wednesday the EU's new financial overseer against meddling with London's banking hub, saying mis-calculated reforms could drive financial services out of Europe.

Chancellor of the Exchequer Alistair Darling said although financial reform was imperative in the wake of the global credit crisis, "nothing could be more self-defeating" than getting it wrong.

"Get it wrong and we risk losing business to less regulated jurisdictions," Darling said, writing in the Times newspaper.

France last week secured control of the prized European Union post overseeing banks and other financial services, despite staunch British resistance to EU efforts to regulate the City of London.

British Prime Minister Gordon Brown has opposed plans to regulate banks, insurers groups and markets from Brussels, as European authorities seek to tighten controls in the wake of the financial crisis.

Frenchman Michel Barnier, appointed to the top post, on Monday dismissed British fears of a crackdown on the City as "greatly exaggerated."

Ahead of an EU finance ministers' meeting in Brussels on Wednesday, Darling said it would be a "recipe for confusion" if firms were supervised by the EU as well as national financial watchdogs.

"We must resist measures, however superficially alluring, that could undermine the effective functioning of our cherished single market. National supervisors, such as the FSA (Britain's Financial Services Authority) must remain responsible for supervising individual companies," he said.

"Decisions taken by new European supervisory authorities should not impact on national budgets," he added.

"In the forthcoming reform of hedge funds, private equity and derivatives, Jose Manuel Barroso, the European Commission president, and Mr Barnier will be mindful that Europe is not competing with itself, but striving for global excellence."