Pan-European proposals on regulating firms listing on stock markets threaten to undermine investor protections enshrined in UK rules, the head of Britain's financial services watchdog said yesterday.
Mr Howard Davies, head of the Financial Services Authority (FSA), said the collapse of US former stock market giant Enron made now a particularly bad time to erode safeguards.
"This is a very curious time to choose to dismantle a well-functioning feature of our regulation of corporate governance," Mr Davies said, in a speech to the FSA's annual listing rules conference.
"In the aftermath of the Enron affair it is remarkable to think we may soon lose the basis on which many corporate governance and disclosure provisions rest."
He said Britain's current regime was attractive to investors as well as companies raising capital and that, rather than repel firms that were going to the market, it attracted them.
Under the European Union proposals, once a company planning to list has its prospectus approved in one European Union country, the plan would be valid in any EU member-state.
That could prevent any member country imposing stricter rules than other European states.
Mr Davies said the plan, as currently proposed, would affect several aspects enshrined in Britain's rules, including those on directors' share dealings and corporate governance.
"It is always important for us to assess the extent to which we are imposing obligations which are more burdensome than those elsewhere and, if we do, whether market participants and investors believe there are advantages in doing so, whether in terms of market confidence or investor protection," Mr Davies said.
The FSA is to begin a review of Britain's listing regulations next month to decide which of its unique rules are the most important to try to preserve.
It will consult all market players about the most important aspects of UK listing rules, in an effort to make sure they are protected in any legislation - or to find other ways to safeguard the interests of investors.
The review could take up to 18 months, an FSA spokesman said.
