Covenant boosted by £35m from bank fines

08 October 2012

Some £35m in misconduct fines levied on banks and financial services companies since April will be used to support the armed forces community, it has been announced.

The money, which comes from fines imposed on banks for attempting to manipulate LIBOR (inter-bank lending) rates earlier this year, will be allocated to the armed forces covenant reference group, which was set up to monitor progress of the covenant and recommend areas for improvement.

The reference group consists of representatives from central government, service families federations, local government and charities, and will spend the money improving conditions for service personnel in areas such as healthcare, family life, housing, education and recognition.

The reference group has representatives from the Confederation of Service Charities, the Royal British Legion, the Soldiers, Sailors, Airmen and Families Association and the War Widows Association of Great Britain.

Earlier this year, Barclays Bank was fined £290m for attempting to fix LIBOR rates, which ultimately affect the cost of personal loans and mortgages.

Amendments to the Financial Services Bill later this year will mean that the revenue left over from the penalties once the enforcement case costs have been covered will be directed to the Exchequer to be redistributed.

The new rules apply to fines imposed by the Bank of England, Financial Conduct Authority and Prudential Regulation Authority.