Ussher said that this type of one-size-fits-all approach would not have the flexibility needed to allow EU markets to prosper, instead it would be 'both rigid and stifling.'
She said that to legislate for a common method of regulation would create a massive and dislocating economic distortion rather than increased prosperity.
Ussher said that it is important for the UK market to be in constant dialogue with the financial services sector, so that the Government can ensure that their voice is heard at the EU negotiating table.
Encouraging industry input in EU financial services supervision, the Treasury and the FSA are publishing a discussion paper on the review of the Lamfalussy Arrangements for financial services supervision, a four-layered approach to regulation and supervision.
Ussher said: "I hope that we can make the Lamfalussy arrangements work more effectively in future - both for Britain and for the rest of Europe.
"To do that, they need evolution not revolution; we must avoid drifting towards a pan-European regulator that would be rigid and stifling.
"These arrangements have provided an effective framework for enhancing regulatory efficiency and supervisory cooperation over the long term. But we think - pro-European but pro reform in Europe - that there are some practical enhancements that can be made that will deliver tangible benefits."
The proposed changes follow two principles:
That regulation and supervision should not be ends in themselves - but should aim to improve markets, and deliver economic benefits. To do that, they should be proportionate; support innovation, competition and efficiency; and promote financial stability.
That regulation and supervision should recognise the need for regulators to be accountable - principally through their Ministers to national governments and parliaments.
Ussher concluded: "We can see the benefits of action in the European stage, but that doesn't mean we shouldn't work to make that action as effective as possible and ensure that the interests of the British financial services sector are at the heart of EU decision-making.
"The revised Lamfalussy arrangements can continue to play a major part in strengthening the single market in financial services, benefiting businesses, consumers and our economies, while Europe will have another political and economic achievement to be proud of."
