HM Treasury announced yesterday that the Government plans to use £35 million of revenue from fines imposed by UK financial regulators on firms in the financial sector to support the British Armed Forces through the Armed Forces Covenant. The announcement, ”Bank fines to be used to support Britain’s Armed Forces community“, states that revenue to be directed through the Armed Forces Covenant will include the penalty imposed on Barclays in relation to the attempted manipulation of LIBOR.
The announcement also also confirms that, in future, regulatory fines revenue in excess of enforcement case costs for the year will go to the Exchequer – as the Chancellor is reported to have announced – rather less catchily – in a speech to the Commons in June. The regulators will be able to cover enforcement case costs for the year from penalties before revenue is passed to the Treasury, but any benefit above these costs will accrue to the benefit of the taxpaying public, rather than indirectly to the financial services industry through the reduction of regulatory levies.
The additional funding will be made available in 2012-13 as a result of amendments to be brought forward to the Financial Services Bill later this year: the new arrangements are to apply in respect of fines received from 1 April 2012, and, going forward, to all fines imposed by new Financial Conduct Authority and Prudential Regulation Authority, as well as to fines imposed by the Bank of England in the course of exercising its regulatory powers in relation to financial services.