1st August 2014
Lloyds is the latest in a long line of banks to be fined as it was forced to cough up over £200 million for its part in the rate-rigging scandal that has swept the banking industry, but where does that money go?
Contrary to popular belief the fines collected by the City watchdog does not all go into the regulator’s or the government’s pocket – much of it is actually distributed to charities, typically supporting the armed forces.
Chancellor George Osborne announced today that the £218 million Lloyds has been fined for its part in Libor-rigging, which was described as ‘reprehensible’ by Bank of England governor Mark Carney, will go to supporting those who are in greater need of the money than bankers.
Speaking on a visit to a Royal Marines base in Dorset where a new facility for service families is being built, Osborne said; ‘I’m pleased to allocate the fines paid by Lloyds Bank to help charities and good causes supporting our armed forces community. We’re using the money raised from fines on those who demonstrated the very worst of value in our society to support those who demonstrate the very best.’
The money will be allocated to The Royal Marine’s charity appeal, the Ministry of Defence physical and psychological rehabilitation programme, and military doctor and nursing training and bursary payments.
With money contributed from other fines, the chancellor also announced a total of £300 million of banking fines would be used to support the Armed Forces Covenant, which sets out the state’s duty of care towards armed forces.
The use of Libor fines specifically to support the armed forces was introduced in April 2012 and now money paid by banks or other financial institutions found guilty of violating the rules passes to the Treasury – last year fines totalled £500 million.
The Treasury then places the money in ‘the consolidated fund’ which is a type of current account run by the government.