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FSA fine money to be spent on helping armed forces

David Cameron 480

The Government is using £35m raised from FSA fines to support the armed services, veterans and their families.

Speaking at the Conservative conference in Birmingham last night, prime minister David Cameron said it was not fair that fine money goes back to the banking industry in the form of fee reductions.

He said: “We don’t think it’s fair that the fines from scandal-hit banks go back into the banking industry. That is why we are directing £35m from banking fines this year to supporting our armed forces, veterans and their families.”

Defence secretary Phillip Hammond said the service pupil premium is increasing from £250 per pupil to £300, will include all pupils whose parents died in service since 2005 and last for six years after a serviceman leaves. The service pupil premium is extra money allocated to students with parents in the armed forces who face particular challenges.

For the 2012/13 year, £70.7m from FSA fines was used to reduce industry fees. The £38.6m levied on the fee block affecting most advisers would have been 21.7 per cent higher without fines from the previous year being redistributed.

In July chancellor George Osborne unveiled proposals to pay FSA fines into the public purse from 1 April after Barclays was fined £59.5m for Libor rigging in June.

He promised an amendment to the Financial Services bill to redirect FSA fines to the Treasury.

At the time, Osborne said multi-million pound fines will go to “the benefit of the public, not to other banks”.

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Comments

There are 25 comments at the moment, we would love to hear your opinion too.

  1. Becoming a headcase IFA 8th October 2012 at 8:59 am

    I guess if the treasury will benefit from FSA fines the government will encourage more of them. Then, of course, when we complain about being treated unfairly, the government will say they can’t interfere with the FSA because they are unaccountable.

    The FSA are unaccountable because it suits the government for them to be so.

  2. They should have been helping the Armed Forces in the first place! Fuuny, now that they are not in opposition we don’t hear so much of the ‘covenant’ word.
    Of course, all the assistance they will give to the Armed Forces will inevitably travel through the banking system, so instead of reducing fees for all in financial services, the banks will exclusively be able to use and profit from the monies.

  3. I’m a former reservist and whilst I have the utmost admiration for the armed services this initiative is completely wrong headed.

    If the the families of fallen servicemen and women need help then help them. What have the fines on FS firms got to do with it. How about parking fines? Or Air passenger duty?

    Dog whistle politics.

  4. I have every sympathy with the way in which our armed forces are taken for granted and, generally, treated quite badly – I served for 18 years myself. However, this re-direction of FSA fines is just a political stunt to make Cameron look a little more caring (just like the £billions spent on overseas aid). The armed forces should be looked after properly without this posturing. The fines should be used directly within the industry to keep the ever-soaring regulatory costs to an acceptable level.

  5. If my fees rise 21.7%, I will no longer trade.
    How many more mad ideas must IFA’s be forced to fund?

  6. As an ex serviceman who did 15 years and having last saterday taken part in the “Ride to the Wall” to support our troops, I feel that I am qualified to say this is wrong. The forces have always been funded from the collective taxes and the public purse, to use the fines to support them is wrong.

    Furthermore, the FSA has grown on the back of these fines since inception and we are now stuck with the costs of this body together with the cost of the growing FSCS and the FOS.

    Now with the exodus of advisors about to happen is not a great time to introduce a 20% plus fee hike.

  7. This is disgusting on three levels.
    1. The Armed forces are a very worthy cause, but it is disgusting that our Government expects our young men to get into harm’s way and when they are hurt abrogate their responsibility and expect these brave people who have served their country to rely on charity. They deserve better pay, better conditions and better support when they need it. Perhaps Cameron should consider stopping foreign aid and giving it to the soldiers if he can’t afford to treat them as they deserve in the first place.

    2. It is disgusting that he tars the whole of the Financial Services industry with the ‘Bankers Brush’. Pure sound bite and just plain wrong

    3. He further displays his monumental ignorance (or playing to the gallery) by ignoring the fact that those fined can easily be excluded from any benefit and that the good firms can therefore benefit. The presumption is that we are all bad. No, I’m afraid that particular assumption about being all bad must be reserved for politicians

  8. “The £38.6m levied on the fee block affecting most advisers would have been 21.7 per cent higher without fines from the previous year being redistributed.

    The idea of looking after our troops is a 100% laudable action, but not with fines which are/ were supposed to redistributed in a defined way.

    This government and others in recent years have a history of putting our troops in harms way for causes that are based on spurious claims of national interest at best. To suggest that the banks and the FS industry should now pay for the resulting collateral human damage of ill thought out defence policy is not appropriate.

  9. Christopher Lean 8th October 2012 at 9:19 am

    Tongue in cheek comment, but I am sure I am not the only one to have thought this!

    I think if the money was diverted to the Armed Forces, it would be a popular move if the Armed Forces could then be allowed to use the FSA for target practice.

  10. I support the armed forces, but this is unfair. Oh what a surprise, something unsfair against financial advisers.

    I get the logic if it was just banks, that fines going back into the financial system gives a reduction in fees. But it is not just the big corporates mis-selling in the industry. What more are they going to do to kill small adviser firms. A rise in excess of 21% for compliant adisers is just not on.

    If you want to give more money to the army raise it another way – put an increased levy on just the banks or just the firms with justified complaints above a certain level, or stop giving money to scroungers who refuse to work and can sit in the pub drinking all day!

    Another article making me angry on a monday morning.

  11. How very “political”. It’s gross. As my husband prepares for his third deployment to Afghanistan as a reservist I could not agree more that he (and I) expect the support he deserves to come from the nation he serves, prepared to commit the appropriate resources to those fighting and to those recovering, not scraping odds and sods of money from disgraced businesses.
    And what’s the incentive to perform better if all we do is make life more difficult for the deserving beneficiary??!!

  12. Perhaps our government might be better placed to look after our troops if they were not quite so busy employing private security firms in warzones, paying massive amounts more that they do to our troops! I know this is happening for a fact. But you see, that means that our government does not have to include any private security individual in the death toll figures (convenient that), nor do they need to consider a pension for that individual.

    The money used to employ private security companies should be used to support and pay our troops, who are the best in the world, and then to ensure that they are looked after for all that they have done for us, whether it is in a good cause or not, they are not the ones who decide!

    Personally, I am unsure about FSA fines going to the treasury, I think there will be a conflict of interest issue in there somewhere!

    I have a son who is serving in Afghanistan and I work in a small financial services company, believe me the increase in fees from the regulatory bodies is quite shocking as are the cuts being made to our armed forces in every area. Disgusting.

  13. In common with some previous commentators, I am also an ex-serviceman.

    However, I share the common view that this is wrong; for the various reasons previously stated.

    What I would like to know is whether Mr Cameron is aware that there are other entities in the financial services sector, apart from the banks. If so, his comments to justify this action are disingenious. If not, then he is either ignorant of a substantive part of the UK economy, or has been wilfully mislead.

    Which is it?

  14. Hello Sailors!

    You’re about to get my lolly! No, not that!

    Love and kisses

    Larrykins xxxx

  15. I wonder how much politicians expenses are working out to be at the moment?

    The brave service men and women would be delighted to know that they allowing a Stasi type operation to flourish in England, and all in their name and in the name of democracy. Fantastic.

  16. I have just checked the calendar, and it is definately not April 1st!

    like everyone, I have a great deal of sympathy and respect for the armed forces, however I dont see how this is appropriate.

    I suppose that there is always the danger of something like this happening when politicians get involved.

    The comments all seem to be about banking fines. lets not forget who actually owns the majority of RBS et al.

    Is this not just a way of the government fining themselves, to then pass on to the armed forces?

    why not get our industry in order first?

    My sarcastic comment is coming…….. why not use the money to pay into a final salary pension scheme for IFAs? i for one would love a non contrbutory scheme just like th HMRC.

  17. Disgusting !!! I am aware that the forces are someform of sacred cow in the UK nowadays, and wo betide anyone raising any doubts but 1) It is a career choice 2) the government should be looking after them anyway.

    Frankly, it would be better spent on financial education projects in the UK which would benefit a much greater number of people.

  18. Clutching at straws.

    I predict that Mr Cameron will be a one term prime minister. It was for him that ‘The Thick of It’ devised the term omnishambles and this type of silly, muddled thinking proves he is simply not up to the job.

  19. Neil F Liversidge 8th October 2012 at 2:12 pm

    So if nobody gets fined, servicemen go short? And they use emotion to hide the fact that they are short changing soldiers and robbing IFAs? Why would any of us ever vote Tory? No way are they the friend of small business. UKIP for me I think.

  20. With the regulatory separation of the big banks from retail firms, IFAs will continue to be penalised by association with the banks.

    Are Cameron and Osbourne really so ill-informed that they believe that the retail sector was culpable with the banks for the credit crunch?

    If not, then this is just a cynical cover up for gross incompetence.

  21. Using the Armed Forces as an excuse for plugging gaps in your coffers – shame on you!!!!

    If the FSA is not accountable to Government then hands off!

    No taxation without representation!

  22. I am starting to wonder why I did my 16 years as part of the TA when a Tax can bre raised withotu representation. Last time the British Government tried to do that, there was a war of independence.
    I fully support my friends and familt still serving, and once again we are being shown that Polticians are the biggest crooks around. Very good comments from others above on this subject.
    Pay the service people for both the risks they take and the injuries they incur, but make sure that it is paid for by taxation so that we can vote against actions.
    Mind you, I am pretty sure the majority of the population of the UK did not agree with the invasion of Iraq especially as it took the foucs off what had started to be done in Afghanistan in 2001. We probably wouldn’t still be there if we hadn’t been forced to invade Iraq.

  23. what a tirade from the industry. the political mandarins have really screwed this one up. it would have been more honourable if they had said they were simply going to put the fines into the Treasury to help repair the financial holes caused by the banks

  24. Utter utter bo11ocks from Cameron again. Well done.

  25. Clearly then, everyone supports our brave boys and girls in the forces but to dress up the treasury’s theft of fines from the financial services sector with a bit of political popularist banker bashing is unbelieveably absurd! I can’t believe Mr Cameron understands the implications of what he’d doing, I thought he was far too intelligent for that, now I’m starting to have serious doubts.

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