It
feels almost a daily or weekly occurrence at best that a bank is fined millions
for foul play or cheating someone or other.
In
the past few weeks we have seen Barclays fined £284 million over rigging
foreign exchange markets and Lloyds £117 million over failing to pay the right
redress to customers it had already mis-sold PPI.
I
am often asked……who gets this fine money? I guess the short answer is George
Osborne.
In
the past, fines by the regulator were small (a few thousand here or there) and
the money was used to offset some of the costs of regulation. But from April
2012 that all changed. Seeing the large number of substantial fines coming
through for banks that had cheated the markets by rigging LIBOR interest rates
the Government decided that it would follow the US Treasury and keep the money
itself (after the costs of enforcement of around £45 million a year had been
deducted by the regulator……the Financial Conduct Authority).
Initially
the Government sweetened the pill of snaffling this money by dedicating the
fines to good causes. The first announcement in October 2012 allocated £35
million of the LIBOR fines to ‘support Britain’s armed forces community’. A
year later, in his 2013 Autumn Statement, George Osborne announced he would “make
a further £100 million of LIBOR fines available to our brilliant military
charities and extend support to those who care for the work of our police, fire
and ambulance services.”
The
money has partly been used to pay for rehabilitation of injured soldiers. The
fines for cheating on the Forex markets are earmarked for the NHS. And before
the General Election the Conservatives promised to use a £227 million fine
imposed on Deutsche Bank to fund 50,000 apprenticeships. All things which you
may think the Government would be paying for anyway!
The
amounts that are now being raised are nothing short of eye-watering. In 2014
alone fines totalled £1.4 billion, mainly from the big banks over foreign
exchange and LIBOR fixing. And so far this year another £814 million has been
clocked up for similar transgressions.
With
just a bit more effort, I am sure the 2014 total can be beaten!
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