What will happen to Barclays’ fine?
You very kindly published a letter which I sent to Alan Duncan following the spate of attempted cable thefts in my area which did initiate a response from him, albeit not a very satisfactory one.
Below is a letter I have sent to Lord Turner at the Financial Services Authority asking about what will happen to the £60m fine it has imposed on Barclays.
Dear Lord Turner,
Barclays Bank has been fined £290m for its manipulation of Libor of which, I understand, £60m has been imposed by yourselves.
After talking to one of your staff on your helpline, I was told that this £60m would be retained by the FSA to help fund its regulatory activities.
Could you tell me if this money, together with further fines which are expected to be imposed on other banks, will affect the levies you currently charge banks and financial institutions?
Basically, will the fines arising from the ‘fraudulent’ manipulation of Libor help to reduce, possibly in the future, the levies you charge on those you are regulating?
As I understand it, this fine goes to the FSA to aid in its regulation of banks and financial institutions, although I had hoped that Lord Turner would confirm or deny this.
As it is very likely that further fines will be imposed on other banks, this could become a very big income stream for the FSA!
If this money remains with the FSA, or its replacement, we might see a reduction in future levies on banks and financial institutions because of all the cash the regulator had in its coffers!
If Lord Turner had replied, which he may yet do, I would have asked why fines imposed by UK regulators do not go to the Treasury which could help to reduce the cost imposed on the general public from the wrong doing of the company.
Also, as I understand it, any fine imposed on a company is charged to its profit and loss account which means that the firm can claim tax relief on this fine.
I find this totally unfair! If I get fined by the police, local authority or whoever – which I haven’t – I have to pay it out of my after-tax earnings. Why should companies be able to get their fines reduced because they can charge it against their income?
How about passing a law that says all fines imposed by a UK regulator have to be paid out of post-tax income thus the full cost falls on the firms’ shareholders and not carried partially by the taxpayer?
DR Frank Isack
Kings Road, North Luffenham
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