12 Fees to meet Treasury expenditure
297. Since the onset of financial crisis, the UK
authorities have engaged extensively with a range of international
bodies such as the Financial Services Board (FSB) and the Basel
Committee on Banking Supervision. The responsibility for doing
so is shared between the Financial Services Authority, the Bank
of England and HM Treasury. Clause 9 of the draft Bill gives the
Treasury a power to direct the Prudential Regulation Authority
and the Financial Conduct Authority to levy the financial services
industry to pay for the future costs of engaging with international
bodies such as the FSB. The policy paper accompanying the draft
Bill states that "the detail of the organisations which are
relevant to this power, and the detail of what expenses can be
recovered, will be set out in secondary legislation".[408]
298. The Royal Bank of Scotland and Legal & General
expressed disappointment that detailed explanation or an indication
of the size of any increase in the levy had not been provided.[409]
The Building Societies Association opposed any material levy affecting
its members on the grounds that, because international financial
stability risks arose typically from large internationally active
banks, any levy should fall entirely or primarily on such banks.[410]
299. Clause 9 of the draft Bill refers to "expenses
(including any expenses of a capital nature) that are incurred
by the Treasury [...] so far as those expenses are in the opinion
of the Treasury attributable to functions of the organisation
which relate to financial stability or financial services".[411]
It could thus be seen as a means of recovering part of the Treasury's
running costs relating to the organisation, such as the pay of
a civil servant or the costs of flights to its meetings. Such
costs, as with such costs in other government departments, would
normally fall to be funded from the Consolidated Fund. The
Chancellor of the Exchequer and his officials assured the Commission
that the provision would be used to fund the direct costs of subscriptions
to institutions such as the FSB, rather than to meet the costs
of officials assigned to relevant work. John Kingman also indicated
that the amounts involved were not great: the UK's subscription
to the FSB was currently set at less than £100,000 a year,
although it was likely to increase.[412]
The Chancellor of the Exchequer added that "since other regulators
in the UK levy for the cost of some of their international activity,
including on the same institutions, we think it is perfectly reasonable
for the Treasury's subscriptions to some of these organisations
to also be paid for by the industry".[413]
300. The Commission
accepts the principle that those creating the risks that need
to be regulated should bear the costs of regulation, including
costs of cooperating with international authorities. If provisions
based on Clause 9 are included in the Bill, the Commission considers
it essential that the Clause be amended to limit the levy to recovery
of subscriptions rather than unspecified expenses, so that the
provision cannot be used by a future Government to recover part
of the Treasury's running costs, such as the salaries of civil
servants involved in this work.
408 HM Treasury, Sound banking: delivering reform,
Cm 8453, October 2012, paras 2.61 and 2.62 Back
409
Ev w100; Ev w145 Back
410
Banking reform : delivering stability and supporting a sustainable
economy, response by the Building Societies Association
(BSA) Back
411
Draft Financial Services (Banking Reform) Bill, Clause 9, new
section 410A(2) Back
412
Qq 1138, 1139 Back
413
Q1137 Back
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