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FSA Fines

Volume 449: debated on Wednesday 19 July 2006

To ask the Chancellor of the Exchequer how the money collected by the Financial Services Authority in fines is allocated. (86561)

The Financial Services and Markets Act 2000 (FSMA) provides that penalties levied on firms are allocated to the fee-block or blocks to which the activities relate—fee blocks group fee payers conducting similar activities. This ensures that the costs of undertaking enforcement actions are matched, as far as possible, with any penalties they might generate.

FSMA sets out that the Financial Services Authority (FSA) must not take account of any sums it has received, or may receive, by way of penalties when fixing the level of its fees. This means that the FSA does not take financial penalties into account when calculating the level of its annual funding requirement and the fee rates resulting from the AFR. Neither does the FSA treat financial penalties as income—rather, they are a liability owed to fee payers.

The FSA’s rules in this area were set out in a policy statement in May (see annex 4 in particular):