My Lords, this group of amendments provides for new arrangements for the use of revenue from financial services fines. In future, regulatory fines revenue in excess of enforcement case costs for the year will go to the Consolidated Fund. The new arrangements will apply to all fines imposed by new FCA and PRA and to fines imposed by the Bank of England in the course of exercising its regulatory powers in relation to financial services. This will apply to FSA fines received from 1 April 2012, so the measure will include the penalty imposed on Barclays in relation to the attempted manipulation of LIBOR.
Under the current arrangements, where enforcement action results in a firm paying a financial penalty, this is applied as a discount to fees paid by other firms in the following year. Without reform, unprecedented fines such as the Barclays fine would have represented a significant windfall to regulated firms. We have of course thought carefully about the impact on those firms which obey the rules. Compliant financial services firms will still be protected from costs directly attributable to the misconduct of others, as the regulators will be able to net off enforcement case costs before handing over penalties to the Treasury and provide a rebate to compliant firms the following year. However, in future, any benefit above these costs will go to the taxpaying public, rather than the financial services industry.
For this year, the Government have announced that £35 million received this year from fines imposed for attempted LIBOR manipulation and other unacceptable behaviour will be used to support Britain’s Armed Forces community. Additionally, £5 million will go towards the creation of the new, ground-breaking First World War galleries at the Imperial War Museum. I beg to move.
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