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Govt will force FCA to raise industry fees to cover its own costs

London UK Thames Parliament 480

The Government will be able to force the FCA to raise fees on the financial services industry to cover the public cost of international regulation under proposals in the draft banking reform bill published today.

The bill proposes that the Treasury can direct the Prudential Regulation Authority, FCA and the Bank of England to charge the financial services firms that they regulate a fee to cover Government costs.

It states: “This would mean that 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.”

The bill confirms proposals to ring-fence bank’s retail and investment operations as set out by Sir John Vickers’ Independent Commission on Banking but stops short of full separation.

It states: “This policy aims to insulate banking services critical to individuals and small and medium- sized enterprises from shocks elsewhere in the financial system, and to make it easier to ensure continuous provision of those services.

The Government is considering whether to exclude derivative products such as interest rate swaps from the retail ring-fence in light of recent scandals as suggested by senior Liberal Democrats.

Chancellor George Osborne has asked the Parliamentary Commission on Banking Standards chair Andrew Tyrie to consider whether ring-fence banks should be able to offer simple derivatives to their customers. It will report back on 18 December with its final conclusions.

There are also sweeping reforms to the Financial Services Compensation Scheme with new statutory duties to operate including a requirement to operate swiftly and efficiently for the benefit of claimants, mitigate taxpayer costs and provide the Treasury with accounting and management information.

The FSCS will also become part of the Treasury after a reclassification as a Government body by the Office for National Statistics. The bill says it will not affect the wider financial services industry and the Treasury will have no powers to intervene in the FSCS day to day affairs. The FSA and successor regulators will remain responsible for making the FSCS rules and setting the annual levy on the industry.

Tyrie says: “This bill is a crucial part of the Government’s approach to improving the stability and competitiveness of the UK banking system

“It is vital to get this right, not just for the sake of the banking industry but in the best interests of the economy as a whole and the millions of businesses, households and individuals who rely on it.

“Structure influences the incentives and behaviour of banks and bankers. With that in mind, the Commission will examine the draft Bill to see what contribution it is likely to make to improving banking standards.”

He says there is a lot of detail still to come and “a lot of ground to cover in a short amount of time” but will be calling for written evidence next week.

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. They will not get much from the IFA sector there will not be many one left after RDR. If there some still working their fees will be so high they will go bust and not be able to pay!!!!

  2. Talk about killing the goose that lays the golden eggs. This bunch are clueless. I`m off to join a miss selling operation as it appears everything sold in the last 25 years is defective, can`t go wrong.

  3. That does it! Next election I’m voting for Guy Fawkes.

  4. There should be an immediate, and concerted, effort by those bodies who claim to represent financial advisers to demand:

    1. Proportionality of the fees charged to the retail advice sector – ie, we shouldn’t be funding the banks or providers.

    2. All revenue raised by fines to be used to cover such costs; with proportionality to encourage good behaviour.

    Otherwise, Messrs Cameron and Osbourne will be shown to be little more than money-grabbing shysters.

  5. “The Government expects costs to industry to be minimal”

    Roughly Translates to

    We will rip the pure and utter P*** out of this to add more to the government pot which can then be squandered on nowt but the over inflated salaries/pension funds of the idiots that have run this country into the ground already.

    Nothing new here really apart from ruining the start of my weekend… NOTE TO FUTURE SELF – DO NOT READ ANY ARTICLES POST 12 NOON ON A FRIDAY IN FEAR OF DAMPENING MY WEEKEND MOOD.

  6. Ps Not that FSA/FCA fees are not high enough already…. Another boot in the proverbials…

    Alan Lakey is spot on…. We are the laughing stock….

  7. “It is vital to get this right, not just for the sake of the banking industry but in the best interests of the economy as a whole and the millions of businesses, households and individuals who rely on it.”
    So how come we are the only mugs paying for it?

  8. That’ll be more first class flights to Hong Kong and Toronto with 6 star accommodation then?

  9. And let’s not fail to mention this crazy idea to let ring fenced banks trade simple derivatives?
    a) is there such a thing ?
    b) they do already ..look at some of their structured deposits
    c) are swaps not a good example already that they can’t be trusted to flog anything less than a pickle sandwich to a starving man!

    vote for Ukip next time, its all we can do!

  10. Give the cat another canary!

  11. I suppose one way to look at it, we must be the only industry in this messed up country still making a bit of money ? but I have just thought of another “hey” Dave and George go have a look at the likes of the PFS, CII, ETC ETC they must be rolling in it with all the cash we have thrown at them.

    Like Harry I am going to put my crosss somewhere else next election, If I want a dictatorship I would have voted for Il Jon Kim (or what ever his name is )

  12. Does any other industry pay fees to the Government?

  13. But aren’t the FSA and, by association the FCA, always telling us that they’re independent of the government? It says so on the FSA’s website.

    What if they just said: No, the industry can’t afford any more levies and is already close to being crippled by what it’s presently being charged? What if yet more MP’s were to demand in Parliament a moratorium on any more levy increases? What would the Treasury do then?

  14. Luckily I am just finishing off my fee structure / proposition for next year and this piece of info has come just in time for me to shove another factor into the mix, which will translate to higher fees for the ‘consumer’ – if they don’t like it they can go online. Thank you RDR, previously I might have tried to swallow this myself with existing ‘standard’ fees / commissions but now I have a licence to pass the whole lot on. Don’t get me wrong, I think that the RDR is an ill thought through, rather pointless, naively conceived and appallingly implemented heap of carp but I feel that personally I will do rather well from it. The consumer won’t be any better off in terms of what they receive from me compared to what they already receive – I will just be charging more for it.

  15. The Government will be able to force the FCA to raise fees on the financial services industry to cover the public cost of international regulation under proposals in the draft banking reform bill published today.
    However, the same government is unable to influence the FSA over grandfathering or delaying the RDR. Strange, very strange.
    As Julien has already pointed out, aren’t the FSA /FCA independent of government?
    Something is rotten in the State of British politics/bureaucracy.

  16. Hello Playmates!

    So, ‘Dave’ wants to give money FSA fines to the armed services on the one hand, but in addition, regulatory fees should go up.

    I know turkeys can sometimes be persuaded to vote for Christmas (it is, after all, for their own good – no Christmas, no turkeys in the first place) but this has all got to the point where HM Gov. has lost sight of what the agenda should really be. If the industry pays for all the regulation then it follows that it should have a say in how that regulation works. That’s even before considering the plight of the PBC (Poor Bloody Consumer) who will be faced with increased fees. And what happened to all the VAT that clients will be paying for advice?

    Back to sleep…… ZZZZzzzzzz………

    Love to all!

    Larrykins xxxx

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