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TSC member: Govt could use bank fines to cut FSCS levy

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The influential Treasury select committee is preparing to turn its guns on the Financial Services Compensation Scheme levy amid concerns about rising advice costs.

TSC member and Conservative MP Mark Garnier has called for a debate on how bank fines are distributed, suggesting they could be used to cut the FSCS levy.

Speaking at the Conservative party conference in Manchester today, Garnier said: “There is a feeding frenzy on the financial services area which means we have got to a stage where there is no sense of ‘caveat emptor’ on the part of the consumer.

“It’s always someone else’s fault and that’s a great problem, which manifests quite worryingly in the huge amount IFAs are having to pay to the FSCS.

“One of the things we need to have a very sensible conversation about is where some of those bank fines are going.

“Should we be diverting some of that money into a fund that will balance the FSCS levy out?”

The Wyre Forest MP also said he wants the TSC to launch an investigation into the advice gap, and emphasised the need for consumers to be able to access advisers as well as “robo-advice” services.

He said: “Can a robot deliver better advice than a person? The answer depends on what the consumer wants.

“I have no doubt that in 20 years’ time we will have consumers who have a perfect understanding, but right now there is a risk of people being left behind.

“There are people out there who will never understand a website.

“At some point everybody will feel completely comfortable using robo-advice, but I don’t think we’re there yet.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. And while they are on with it they may also like to demand an explanation as to where all of the £1.3 billion from last year’s fines has landed up!

  2. “Mark Garnier has called for a debate on how bank fines are distributed, suggesting they could be used to cut the FSCS levy.”

    Where was he when a statute was ‘laid before Parliament’ in February 2013? It went into force on 1st April 2013, yes what a day, making sure that those vast fines would be legally ‘skimmed off’ to benefit the Treasury, who perhaps with some sense of cynicism could have been privy to some ‘inside knowledge’ on how big those fines were going to be or actually set those huge fine levels.

    In an episode of the 1980’s TV series “Minder, Arthur Daly is seen trying to sell the landlord of the Winchester Club, Dave Harris, a watch. Arthur says, “At that price it’s a steal”, to which Dave replies, “That’s what worries me Arthur”.

    In January this year, we expressed grave concern that the Treasury is treating fines levied upon the banks and the financial services industry as another form of tax raising, to be spent in ways various, or not at all, with the public expected to believe the spin that it is ALL to be spent on good causes.

    In fact we stated a Downing Street petition on the matter in April. Thanks to the many hundreds who added their names in such a short time.

    The Treasury trumpet, being loudly blown by the Prime Minister and the Chancellor, was sounding some really caring, sharing notes about how the banking fines will be used, for example to help wounded troops recover by way of various military charities.

    It made a great pre-election sound bite, and after all, who would cast the first stone at that most laudable of causes, even though the terrible state of our wounded and often cast aside veterans is not, at all, the fault of the banks or indeed the financial services industry.

    But is all as it seems, are the fines being freely donated by HM Treasury toward those good causes as stated? How much has been spent and more importantly, how much has not been spent only to disappear into the general taxation pot or simply reducing the national debt left by the previous Labour government?

    We issued an FOI request to the Treasury in January and the reply received has sadly confirmed that all that money was a long way from being spent in the ways it was suggested and is looking increasingly unlikely within the life of the current parliament, as was pledged.

    Fines are no longer used to reduce the regulatory cost on firms who had ‘done the right thing’ (as Mark Garnier would wish) so they could enable that reduction to be passed back their customers by way of lower charges. Regulatory fines are no longer about putting things right surrounding the bad behaviour of the banks toward their customers. Bank fines are simply a form of taxation, windfalls.

    I think as an industry, we should be frankly appalled. The fines are a “craftily legislated taxation ‘skim’, a political opportunity steal of gargantuan proportions. And that is what worries me.

    Banking fines for 2014 were £1,462bn To put some contextual scale to this massive amount, the total revenues raised for alcohol and tobacco in 2014 was £197bn- that equates to 4% of total UK taxation revenues according to HMRC figures.

    The FCA was obliged by statute to pay away £1.370bn of the fines the Treasury, the equivalent of 70% of alcohol and tobacco levies for 2014.

    How has that money been spent? According to our FOI request reply:

    £35,000,000 to the Armed Forces

    £10,000,000 to Armed Forces covenant

    £40,000,000 toward veterans’ accommodation

    £20,000,000 to Childcare, but exactly what is not known

    £10,000,000 to medical training, again, exactly what is not known

    £10,000,000 to Blue Light charities, exactly which is not known

    £10,000,000 to Youth United

    £5,000,000 to the Imperial War Museum/ WW1 gallery refurbishments

    £ 1,100,000 an approximate VAT rebate for the Tower of London poppies sale to allow more money raised to go to charity. This is not a government donation. It is a fine redistribution and a very cynical play upon public sentiment and the war dead of WW1.

    This gave a grand total of £141,000,000 going toward good causes. And some £1.322bn left over in the period just before the May election.

    I have never really had much time for the ‘Walking Opinion” that is Bono, but he had a point when saying “When a nation is over-reliant on one or two commodities like oil or precious minerals, corrupt government ministers and their dodgy associates hoard profits and taxes instead of properly allocating them to schools and hospitals”.

    Go Mark go!!!!

  3. I am sure Mr Garnier did not think that up all by himself, we have been saying it for ages. The problem is that George needs the money and one lone voice will not stop him raiding our coffers.

    At least politicians are aware that the advice gap is a result of Government policies and regulation, not through the non cooperation of advisers who do not wish to gamble with their futures.

  4. Instead of carping about Garnier, we should be thankful for anyone expressing support.

    I suspect the simple truth is that, apart from people in the industry, nobody else cares a jot about the size of FSCS levies. To the rest of the country, it is as important as black cabbies moaning about Uber and dairy farmers crying over milk prices.

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