View more on these topics

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.

Recommended

1

TSC member’s firm linked with Libor inquiry

Treasury select committee member and Conservative Party deputy chairman Michael Fallon is a non-executive director of one of the firms currently helping the FSA with enquiries over the manipulation of the Libor rate, it has emerged. Last week, Barclays was fined £290m by UK and US authorities after it admitted some of its derivatives traders […]

Moody’s downgrades Barclays outlook

Moody’s Investors Services has downgraded the outlook for Barclays to negative over concerns about senior resignations at the bank, which have included chief executive Bob Diamond. The ratings agency claims the resignations and uncertainty are negative for bondholders. In its outlook downgrade the agency reports that though longer-term the potential shift away from investment banking […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

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

  1. nice, now we have the Treasury getting in on the act, behind the scenes putting pressure on the FSA to levy more fines to raise additional revenue. Where will it all end???? This is so wrong, but who in power or the public at large really gives a toss.

  2. ahhhh now i know where he’s getting the money to help plug the gap created by stalling the fuel duty rise. What a bunch of idiots running this country.

  3. Dominic Thomas 2nd July 2012 at 5:53 pm

    If ever there was a time for a rethink about how fees are paid, how firms and advisers are categorised surely it is now.

    Lets stop all the faffing around and sort it out once and for all. The Government are clearly only acting in a way that they think the electorate will think is reasonable, say some harsh words and hope that the fact that they go to the same dinner parties won’t be noticed.

    fed up with the lot of them.

  4. So, when we are sucked dry with additional levies by the dictator, we pay up meekly like saps.

    And when the dictator gets some money in, he filches it elsewhere instead of ameliorating the pain of the put-upon advice community.

    More like Stalinist Russia/Zimbabwe than a democratic society.
    Am thinking of passporting out to North Korea in an attempt to be less ground down

  5. Malcolm Coury 2nd July 2012 at 6:41 pm

    Outrageous. Our whole sector is creaking under the cost of regulation, compliance, PII etc. if the government is allowed to raid the FSA’s coffers the knock on effect will be to increase our fees further and could be the final nail in the coffin of many firms struggling to survive in the current climate. It’s about time the way the system is funded is properly reviewed. As usual it will be the small firms who suffer the most and the government will have their blood on it’s hands. Whatever next!?

  6. Surely this is misappropriation or ‘stealing’ by the government. How do we let them get away with it. We need civil disobedience by not paying levies en masse. We need somone like AIFA to actually organise and fight this.

  7. Now we know why they are still pursuing IFAs over Keydata as the Banking fine would otherwise have gone towards meeting the levy costs due to the failure of the product provider Keydata, whose product wasn’t a product according to FSCS.

  8. Exasperated Me 2nd July 2012 at 8:18 pm

    It is a total ripoff.

  9. This stinks! We have to pay the FSCS levy and the cheeky hits ask for more half way through the year as they got their sums wrong, now they will have less money coming in as the fines will not be kept, less companies paying (as our numbers are falling by the day) all this equals greater expense for the good ones with prudent businesses, enoughs enough, I am speaking to my MP tomorrow and demand representation. On mass we CAN fight this, everyone in?

  10. I thought the FSA was totally separate from government? The money doesn’t belong to the government if belong to the people that pay the FSA’s fees!
    I am becoming more and more convinced that we no longer live in a democracy!

  11. Alan Kendrick 3rd July 2012 at 8:15 am

    I understood that the fines were to be used to help cover the costs of the FSA and any excess to reduce the charges mafe to IFAs etc.

    For the Treasury to now claim the money is a form of taxation. This would be acceptable if the Government funded the FSA but as it is funded by the financial community then any benefits, and we could do with some after all the recent increased regulation and costs, should go back to the Financial Community.

    If only we could change the FSA’s name to Vodaphone, and negotiate direct with HMRC then we may get a result.

  12. This is theft.

    The FSA is separate from the Government so the Treasury should not be allowed to benefit from these fines.

    Surely it has to work both ways – if the FSCS needs more funds the Treasury should stump up the funds going forward.

  13. Philip Curnow 3rd July 2012 at 8:34 am

    Oh, I’m so delighted that I got out of regulated financial services a few short years ago and had enough other irons in the fire to survive ! My advice would be that everyone should simply saytoall IFAs to simply say “No ! We are not playing this game anymore” and do something else with the energy and zeal for providing “Best and Impartial Advice” for clients. Perhaps take up good honest journalism to keep the public informed. Let the Robber Banks take the hits of the huge fines and eventually you may get back into a more sensible enviornment when there is a cry again for good, personal, impartial advice. In the meantime, think of the effect of the stress of being an IFA on your health.

  14. Note to Nick – We do not live in a democracy, that would imply we have some power to change the direction this country is being conned into pursuing.

    IFAs in general are a disparate, independent bunch, hard working and generally diligent in what we do, we actually want our clients to stay with us and use our services.

    The FSA however is bunch of no hoper dipsticks, set up by a government with no scruples as to how much they rip off the taxpayers and until we have a leader who has the interests of UK citizens at the heart of their philosophy, we have no choice other than to bend the knee, offer up our hard earned money to the FSA, FSCS, FOS and the Treasury until there is nothing left.

    The losers are of course the country as a whole, our clients and ultimately ourselves as the dictatorship will survive because the majority of the Uk population is basically uneducated in the machinations of governments.

    No – I am not a commie sympathiser, that is worse than we have, but to suggest that we should refuse to pay levies is laughable, it would only hasten the decline in sector firms and advisers quicker than it is now.

    What I get incensed about is the apathy of Life and Investment firms CEO’s, network bosses, whose blatant kow towing to the FSAs every madcap scheme has brought us to this juncture.

    IF THOSE PEOPLE had got together (not within AIFA who seem to be powerless) before this mess came about, we would not have an uncaring regulator and we might even have a rule book similar to the old Fimbra rule book, which in essence was written in plain english, established common sense rules and codes of conduct and was easily understood.

    We, as a sector, are under attack from the machinations of the insiduous, counters and cowans to common sense.

  15. This decision won’t make much difference to IFAs as fines were simply used to reduce the related fee block e.g. bank fines reduce bank FSA fees the following year.

    Of course the fair thing would be for the fines to reduce the overall FSA fees but I’m not holding my breath on that one.

  16. Whoops. That is going to knock a hole in the FSA Xmas party bar tab!

  17. Ned Taylor for Prime Minister – i’d vote for you.

  18. There are two sides to every argument and on this one George Osborne seems to have the moral high ground. If this is a done deal provision must be made for the costs of the enforcement action, including FSA staff time/expenses, to be deducted with the remainder handed to the Treasury so that good firms are not funding the costs incurred investigating the bad.

  19. Any fines going to the regulators is wrong. A regulator or ombudsman should not gain from its own inefficiency. The FSA should have seen and stopped this at the first instant. There should be a system of paying all these fines into a compensation pool with the Bank of England, so the wronged can be compensated, if not done by the guilty. The surplus can be used to buy back the debts.

  20. Kevin Grimwood 3rd July 2012 at 10:21 am

    So the conservatives are the party of business hey? don’t make me laugh parties argonised in breweries comes to mind.

  21. No objection wto fines going to the Treasury if the FSA are funded by the Treasury and Absolutely accountable to Parliment.

    It is time to stop the Stupidity that is RDR and concentrate on a comprehensive reform of the Financial Services Industry. Talk in a meaniful way to those of us at the coal face, to consumers and to the people at the banks.

    Set a target date to tie in with what is happening in Europe and when the equiry reports back to actually listen to and implement their findings.

  22. David Parkinson 3rd July 2012 at 10:37 am

    An absolute disgrace. FSA now equals HMRC? No wonder IFA’s are getting screwed. At a time when the FSA headline that they are going to reduce IFA fees our renewal is nearly double. On top of that interim levy’s. A complete sham.

  23. The FSA claims total independence from Govt. and is NOT funded by the public purse so on what basis can the Treasury even ask for any fines to be handed over?
    It is far from equitable that regulated firms should fund investigations only for the Treasury to take any proceeds.
    At the most the Treasury should only get any balance, after all administration and investigation costs have been charged. These should include investigation costs that do NOT lead to fines, otherwise our clients ultimately pay the Regulator to undertake investigations only for the Treasury to pocket any fines levied.
    Think this through George! It may sound good in the media at the moment but it further damages this Govt.’s authority, moral or otherwise.

  24. The FSA should never been alowed to keep fines in the first palace as the Regulator, Investigator, Judge, Issues fines and then KEEPS them AND ACCOUNTABLE to NOBODY.

  25. Looks like there could be more fines with the Bank of England at the top of the list in their culpability in LIBOR fixing and some MPs and Cabinet Ministers. No wonder they don’t want a judicial enquiry!!!! Could be a real can of worms.

Leave a comment