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FSA borrows £200m to cover spending deficit

The FSA has had to borrow £200m from Lloyds and HSBC and is being warned by the board to review its cashflow, according to the Independent on Sunday.

This is the first time the FSA has drawn on a £100m credit agreement with Lloyds, which was set up prior to the credit crunch. The regulator has also borrowed a further £100m from HSBC.

The FSA has also agreed a further loan from Lloyds to finance its expected deficit for the upcoming year.

The FSA board agreed the loans, but is now asking executive directors to review the regulator’s spending.

The Independent on Sunday says while the FSA’s average cash balance last year was £56m, it fell to £200,000 at the end of March, compared to £24.8m at the same time the year before.

An FSA spokesman says the regulator 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 don’t have a timescale on that yet.”

Last week Money Marketing revealed that the FSA is currently owed £900,000 in outstanding fees by 1,692 regulated firms.

The figures were obtained through a Freedom of Information request. The FSA says this list includes firms that are in dispute over fees.


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There are 20 comments at the moment, we would love to hear your opinion too.

  1. Like Topsy….
    It grows and grows without proper controls or any accountability. Truly scary stuff… and we have nothing to show for all the £billions spent over the last two decades.

  2. FSA borrows £200m

  3. FSA borrows £200m to cover spending deficit
    The phrase “physician heal thyself” springs to mind….

  4. Final Confirmation!
    The FSA really is the biggest Quango of all!

  5. FSA borrows £200m to cover spending deficit
    The sooner the Conservatives get in and get rid of this money guzzling, power-mad, totally out of control leviathan, the better. If the FSA was required to operate as a remotely commercial enterprise, it would have crashed long ago with debts even bigger than those it has now. My multi-point programme for root and branch reform of the FSA is available on request (though total scrappage is the preferred option).

  6. “…we don’t have timescale on that yet.”
    Can you imagine the lender’s reaction if you or I applied for a mortgage and were asked ‘over what period?’ and replied – ‘not sure yet’. Maybe someone needs to introduce the FSA to cashflow modelling!

  7. FSA – Cash Liquidity
    The quoted figures are lifted straight from the FSA’s audited balance sheet, which is reproduced within the FSA Annual Report 2008/09. Note 13 of the accounts indicate that the Authority organised a £100m borrowing facility in February 2007, with a further £100m credit facility put in place at the end of May 2009. The rate of increase in FSA expenditure, and therefore the projected liquidity defecit could be regarded as alarming. Disciplinary Fines revenues jumped in 2008/09 to £27m (2007/08 – £4.4m), and cynics might say that if the Authority can continue with its seven-fold increase in Fines in 2009/10, everything will be ‘just fine’.

  8. Adequate capital…
    …and they have the brass neck to query adviser capital adequacy…The sooner they go the better

  9. £200m borrowed
    Where did the money come from that paid bonus’ recently – out of the overdraft? Just wonder how the FSA would view a regulated company operating on the same basis? Sorry, I forgot – they let the banks operate on this basis without any problems. When are they going to operate in the real world please?

  10. Send in the clowns.
    No doubt we will now see the number and amount of fines increase dramatically (as if they have not already) to pay for this circus.

  11. I’m living in a punch and judy show!
    The FSA applied to the court make Keydata insolvent. Would it not have been hilarious if someone at Keydata had applied to the court to have the FSA declared insolvent!

    I went for a swim on the beach at lunchtime (it’s lovely here in Broadstairs) when I got back and read this article, I could have been mistaken for being there still and watching the punch and judy show!

  12. FSA Borrowing
    This surely has to beg the question ‘Is this not classed as a conflict of interest?’ How can you regulate someone to whom you are in debt to?
    Also how come we are told we have to have money in reserve, and shorlty to have much bigger reserves, and yet the FSA apparently don’t! Not to mention where did the money for the bonuses come from? If we tried to pay ourselves a bonus and had to borow the money to do it, I can just imagine what the FSA would have to say about that!

  13. FSA borrows £200m to cover spending deficit
    And who will foot the bill for the interest payments on these enormous loans?

  14. Whitehall Farce
    FSA are just about to hoover their ‘regulatory fees and levies’ out of my bank account and yet they cannot even run their own show on a viable basis. Makes me feel proud that I am solvent and yet they are not.Brian Rix would be proud of their performance.

    Until recently the FSA obliged my Ltd to undergo an audit, as they would not grant the Small Company’s Audit exemption to small directlt regulated IFA’s.

    I am still obliged to maintain £10K (dead money – soon to be increased) to meet solvency requirements and each six months submit an electronic return RMAR including:· balance sheet;· profit and loss account (including commissions and fees);· regulatory capital;· information on the operation of any client money accounts; and· information on professional indemnity insurance cover. This of course is in addition to a myriad of other regulateory requirements such as TCF etc.

    When I read that the FSA has had to borrow £200m from Lloyds and HSBC and is also being warned to review its cash flow I would like to ask who is regulating the regulator, who is auditing the regulator?

    Further I find it distinctly uneasy to find that the FSA is obliged to borrow from those it allegedly regulates, especially at a time when there is grave concern that the FSA has in fact failed to regulate the very same banks that it is forced to borrow £200m from?

    “Sed quis custodiet ipsos custodes?”,

    Who guards the guards? Satire VI

  16. FSA borrows £200m
    Clearly the FSA should not have paid bonuses to their employees, as they must have known that they had a spending deficit.

  17. Abuse of Powers
    I am gobsmacked! FSA taking out a loan through any institution in the financial sector that they are regulating is abuse of their power and authority. Yet more evidence of how they cohort with the lenders.They would hardly have taken independent advice from an IFA or a mortgage adviser would they?

  18. Oh Dear!
    Go now you complete shower of clowns.
    I have absolutelty no respect for you at all. You are awaste of tax payers and my money. You are beyond a joke.
    Bring on the Torries!

  19. Ill advised borrowing
    I assume that the largest outgoing for the FSA is the wage bill for all its ‘experts’.

    I wonder what the regulator would say if the firms they regulated had to borrow just to meet the wage bill at the end of the month. Especially when they tell us that they do not know when they will be able to pay this money back.

    There is obviously a conflict of interest here and I also doubt that, in the current lending climate, any bank would be prepared to even consider lending without a clear and credible repayment plan in position.

    This would be laughable if it wasn’t so serious.

  20. MY MONEY!
    How can the FSA say they are independent when they have gone cap in hand to the banks to borrow money. These are the banks that were not regulated in the first place by the FSA and have been bailed out by the taxpayer. No-one at the FSA has yet been made accountable for the whole sorry debacle. As a taxpayer struggling to make ends meet I object to my money being used to line the pockets of this grossly overpaid and unregulated quango! Get rid of them all.

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