The Government will be able to force the Financial Conduct Authority to hike the financial services industry’s fees to cover the public cost of international regulation under proposals in the draft banking reform bill.
The bill, published last week, proposes that the Treasury can direct the Prudential Regulation Authority, FCA and the Bank of England to charge regulated firms a fee to cover Government costs.
It states: “This would mean the Treasury could recover from the financial services industry expenses it incurs in relation to work within international organisations in connection with financial stability or financial services, such as the costs associated with the membership of international financial stability fora like the Financial Stability Board.
“The growing importance of the FSB and other international bodies as forums for setting international standards which promote financial stability or relate to financial services make it vital that the UK can continue to be well represented in these forums. The Government expects costs to industry to be minimal.”
Jackson Financial Services managing director Pete Matthew says: “It sounds like a blank cheque. I am not satisfied by being told the cost will not be much, as the Government cannot possibly know. The cost of regulation is going up and up.”
In July, chancellor George Osborne said the Government will publish amendments to the Financial Services Bill that will allow it to keep all FSA fines levied since April following the £59.5m fine imposed on Barclays for Libor rigging.
He said penalties paid by banks and others who break the rules should benefit the public, not other banks by reducing their annual levies.
Last week, prime minister David Cameron revealed £35m of fines from 2012/13 will go to the armed forces, veterans and their families rather than back into the banking industry.