Changes to policy at the Financial Conduct Authority could mean that banking fines will be donated to charity instead of being used to balance budgets. The FCA, one of the country’s largest financial regulators, received more than £500 million in bank fines this year alone.
This compares to just £5 million in fines received during 2007 – one year before the devastating 2008 financial crisis. The massive increase in the amount and size of the fines has been attributed to a significant rise in illegal and unethical activity at major City banks, with Rabobank and Royal Bank of Scotland charged £193 million due to their involvement in the Libor rate rigging scandal. Fines from Swiss financial firm UBS and British bank Barclays totalled over £220 million last year.
Before April 2012, fines collected by the FCA were used to reimburse its members – major banks and financial services firms – for their membership fees. In effect, the financial regulator was rewarding – albeit on a very small scale – offenders with a reduction to their membership fees.
For the last 18 months, however, fines collected by the FCA have been passed on to the Treasury, which has no interest in reimbursing banks for their behaviour. With over £382 million in fines collected last year alone, the government plans to use the money raised from fines to fund military charities and fire and ambulance services.
£35 million will be donated to charities such as Help for Heroes – an organisation that supports war veterans with mental illnesses – and the Royal Marines Families and Veterans Centre, which is based in Dorset. Army Plan, another military charity, will receive £1.5 million in assistance from the Treasury.
As well as the recent donations, the government plans to donate £10 million to an assortment of military charities on an annual basis. The money will be taken from Libor fines paid by major banks and financial services companies.
