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£200M loans for regulator

The FSA has had to tap into £200m worth of credit facilities with Lloyds and HSBC to cover a funding deficit for 2008/09.

This is the first time the FSA has made use of the £100m credit agreement it has with Lloyds which was set up before to the credit crunch.

The regulator has also secured an extra line of credit for £100m from HSBC.

The FSA spent £347m in 2008/09 but raised only £324m in fees and other revenue.

Reports suggest that the FSA has already agreed a fur- ther loan from Lloyds to fin- ance its expected deficit for the forthcoming year but the FSA would not comment on any future borrowing.

The regulator chose to borrow from commercial banks rather than from the Bank of England or the Treasury.

A spokesman says the regu- lator had to borrow the money to pay for its new supervisory enhancement programme, which is being funded through this year’s fees. He says: “The loan will be used to finance the cost of the SEP until we collect fees in full. We will pay back the loan when we are in a position to do so, we do not have a timescale on that yet.”

Last week, Money Marketing revealed that the FSA is owed £900,000 in outstanding fees by 1,692 regulated firms. The FSA says this includes firms that are in dispute over fees.

Baronworth Investment Services director Colin Jackson says he is concerned that regulated firms will have to foot the bill for the loans. He says: “If we have a change of Government and the FSA is disbanded, will we have to pay for these loans?”



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