Commentators are warning David Cameron’s decision to block a new European treaty could backfire by reducing the UK’s influence on financial services matters within Europe.

Last week, leaders from 26 EU member states either signed up to or agreed to consult their parliaments on proposals to place fiscal limits on eurozone econ-omies. The move was intended to calm market fears about eurozone sovereign debts.

Prime Minister David Cam-eron refused to back the plan after he failed to secure safeguards for the City over future financial regulation and rejec-ted proposals for a financial transaction tax.

Cameron wants the FSA to have the final say over UK financial regulation, partly because of concerns that EU bank capital rules will scupper higher requirements proposed by the Independent Commission on Banking.

Cicero Consulting director Iain Anderson says the UK will still be subject to EU capital rules and all other EU financial regulation but the UK could now have less influence on future negotiations.

He says: “Britain is still affec-ted by the EU regulation on the table and the question comes back to Britain’s ability to influence the authorities.”

Fishburns partner Harriet Quiney says: “Things like Mifid and the Insurance Mediation Directive will not just stop applying, so reducing influence to win headlines or as a sop to parts of the Conservative party could really backfire.”

Association of British Insurers director of prudential regulation Hugh Savill says: “A financial transaction tax would be bad for British consumers and the consequences of closer fiscal harmonisation are not understood but the immediate challenge for us will be exerting influence over EU regulations that will affect the UK financial services industry and its customers.”

Aifa director general Stephen Gay says the ability of the financial services sector to lobby Europe will not be affected.

He says: “I am sure that the consistent force of messages being delivered via the industry through a range of lobbying mechanisms will still have impact. We remain convinced that democratic principles will continue to apply and we will have our concerns fully considered by the Commission and Parliament.”