Between April 2021 and April 2022, none of the funds from the Financial Conduct Authority's fines were put towards charity donations.
According to a Freedom of Information request, the FCA is required by law to pass revenue from fines to the Treasury, net of enforcement costs.
Since April 2012, the money collected from FCA fines has gone to the Treasury, which are then able to go towards charity donations.
The Treasury said it is required to surrender these funds to the consolidated fund but it is not ring-fenced for any specific area of government spending. Instead its is used towards general government expenditure on public services.
“As such, no funds from FCA fines have been provided to charity by the Treasury between April 2021 and April 2022,” it said.
FTAdviser understands that the last time the Treasury opted to use the revenue raised from FCA fines to fund charities was in 2015, through the HMT Libor Fund.
A HM Treasury spokesperson said: “Money gathered from FCA fines goes straight into funding vital public services like the NHS, police, and schools."
There is no expectation at the time - or since - that the proceeds of all FCA fines go to charity on a permanent basis.
Simon Harrington, head of public affairs at Pimfa, said FCA fines should be used to help subsidise the FSCS levy.
“While we have seen welcome reductions in funding the Financial Services Compensation Scheme in the recent past, the cost of funding the FSCS still remains too high for two specific reasons," he explained.
“In the first instance, any consumer that has had to make use of the FSCS has received a poor outcome that it would have been better to avoid.
"Secondly, the cost of funding the FSCS for firms represents a missed opportunity for internal investment, something which stifles growth and innovation while well run firms pay for the poor behaviour of those firms that have failed.”
Harrington added: “We remain of the view that a polluter pays model is the fairest way to compensate individuals and, in line with this principle, would continue to urge the government to consider the use of Financial Conduct Authority fines to help subsidise the FSCS levy.
“Using FCA fines to help fund the scheme is the purest distillation of a polluter pays model and we would urge HMT to divert fines which currently go to the Exchequer to both compensate consumers who have been let down and support the UK’s financial services sector.”
FCA fines
Earlier this year, it was reported that the number of fines issued by the FCA more than doubled last year, rising from 10 in 2021 to 26 in 2022, according to international law firm RPC.
Fines relating to the mistreatment of retail customers in 2022 covered a number of areas, including offering poor advice regarding pension transfers, investing in risky assets within a self-invested personal pension and poor treatment of customers in guarantor loans.
Last year in March, the FCA fined asset manager Gam International Management £9.1mn for failing to manage conflicts of interest arising from transactions linked to Greensill Capital.
The regulator also fined Tim Haywood, a former bond fund manager at Gam, £230,037.
In July, the FCA fined The TJM Partnership Limited £2,038,700 in its third case relating to cum-ex trading.
This was followed by the fine on specialist mortgage lender Gatehouse Bank of £1.58mn for breaching money laundering regulations.
In December, the City watchdog fined Metro Bank £10mn for publishing incorrect information to investors and fined two former executive directors a further £358,000.
Pembrokeshire Mortgage Centre Limited was also fined £2.4mn in December for giving clients unsuitable advice to transfer out of the British Steel Pension Scheme and other defined benefit pension schemes.
sonia.rach@ft.com
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