Poland rejects EU criticism of new watchdog

Poland has rejected European Union criticism that its new financial regulator might fall victim to political meddling, a Finance Ministry spokeswoman said on Wednesday.

The EU's top financial regulator, Charles McCreevy, wrote to the ministry this week saying he was concerned the newly created watchdog could fall prey to political pressure, since most of its board members can be recalled at any time. The government has argued the Financial Supervision Commission (KNF) will generate savings and improve supervision.

"The message of our answer to the EU will be that the regulator is independent and not under government influence," Finance Ministry spokeswoman Dominika Tuzinek-Szynkowska said.

She said the ministry would reply with a letter to the EU this week.

Created in August, the KNF assumed the responsibilities of the Securities and Exchange Commission and a pension and insurance regulator, and its chairman heads the banking supervisory body.

McCreevy said the KNF may weaken oversight and jeopardise market stability.

"In particular, I am concerned about the new appointment and dismissal procedure for the members of the Financial Supervisory Commission, which risks undue political control over supervisory operations," the letter read.

He asked for assurances from Finance Minister Zyta Gilowska that the watchdog remain free from interference.

Prime Minister Jarowslaw Kaczynski said on Tuesday he was astonished by the letter, which he said Gilowska would answer.

Kaczynski and his twin brother Lech, Poland's president, have clashed with the European Union and Poland's central bank a number of times over banking regulation since their conservative party took power last year.

The central bank has said the Kaczynskis are waging a vendetta against its head, Leszek Balcerowicz. It says the new watchdog reduces its traditional role in Polish banking regulation and could destabilise the sector.

McCreevy, who has sweeping powers to safeguard the free movement of capital in the EU's 25 member states, said in September he would take action against Poland if he finds evidence the new regulator is subject to political interference.

Source:businessinsurance.com