The U.K.’s House of Lords is urging the British government to veto proposed strict new alternative investment regulations currently being debated by the European Parliament.
The House of Lords European Union Committee said the U.K. “should not agree” to the Alternative Investment Fund Managers directive unless it is substantially altered. The proposed rules would impose strict new reporting and custody requirements on hedge funds and private equity funds, as well as possible leverage limits.
But, as written by the European Commission, the rules would sap European competitiveness, the Lords complain. The U.K. should not accede to the proposal unless it is made “compatible with equivalent legislation with regulatory regimes in third countries and in particular in the United States.”
“The U.K. government should do everything it can to ensure that the final proposals that emerge in the AIFM Directive do not damage the EU and U.K. economies to which the City of London makes an important contribution,” Kenneth Woolmer, a member of the Lords committee, told Bloomberg News.
The Lords report is the latest salvo attacking the proposal from across the Channel. Earlier this week, both the Bank of England and Financial Services Authority warned that the rules could have disastrous unintended consequences for European economy.