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Treasury to Receive Over £200 million in Banking Fines
The Treasury is set to receive a spectacular belated Christmas present this year: over £200 million in banking fines. Under new regulation introduced last October, the money raised from punishing banks’ misdemeanours, of which there were many in 2012, will not go to the FSA, but to the Treasury. Hopefully, this move will not encourage the government to hand out fines indiscriminately solely for the purpose of boosting its balance sheet.
At present, the debris-strewn financial landscape of 2012 is set to benefit the Treasury to the tune of £312 million. But before the end of the financial year in April, this figure is likely to be much higher, with RBS expected to settle over Libor by paying a fine of about £350 million.
What is the government going to do with this money, which comes on top of the annual banking levy of £2.5 billion? So far, it has promised to hand £35 million to armed forces charities; once the FSA’s investigation fees are deducted, around £172 million will be left. After it receives its chunk of RBS’s fine, the final figure for the Treasury will far exceed £200 million.
Financial iniquity, it would seem, now means profit for the government. At the end of last year, I argued that fines are not an effective way in which to punish banks and bankers for immorality or incompetence. The danger of handing the money they raise to the Treasury rather than an independent regulator is that the government might be less inclined to look at other ways of addressing the City’s misdemeanours.
Read more by Mark Nayler
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