FSA fines since April set to go to Treasury

The £59.5m fine handed to Barclays by the FSA for attempting to rig the Libor rate and any other FSA fines since April could be paid to the Treasury under proposals being considered by the Chancellor.

Currently, when a firm in one FSA fee block is fined, the relevant enforcement action has been funded by the fee block. Part of the fine is used to top up that block’s funding to take account of the money spent on the enforcement action. The rest of the fine proceeds are used to reduce future levies across all fee blocks by an equal amount.

But the Government now wants fines handed down by the FSA since April to bolster the public purse instead.

In a statement to MPs this afternoon, Chancellor George Osborne said the Government would publish amendments to the Financial Services Bill in the autumn to introduce the change which would cover any fines levied since April.

”These new arrangements will apply to fines received from the April 1, 2012 so it includes the Barclays’ penalty and from now on the multi-million pound fines paid by banks and others who break the rules will go to the benefit of the public not to other banks.”

Osborne tipped the move last week in a Parliamentary statement responding to news that Barclays had been fined £290m by the FSA and US authorities.