Pressure for further convergence of European financial sector supervision continues to mount. There is still considerable opposition to further integration. But debate is nevertheless increasingly focused on what form further integration should take. This paper contributes to this debate by discussing the advantages of a dual system that provides financial institutions with a choice between national and European level regulation and supervision. A dual system with choice could facilitate the emergence of specialised supervisors and regulatory models that promote diversity and competition between financial institutions’ business models. This would provide a much needed boost to the process of integration and could help to shift the fault lines of competition away from national borders towards transnational market segments. At the same time, it would address concerns that a dual model without choice might create a sort of “regulatory apartheid ” system of internationally active institutions and more locally focused banks. Lastly, it would strengthen mutual recognition and provide reassurances to those that fear a European authority might hamper innovation and compromise the growth of EU’s important financial centre in London.