Think tank says share of £2.6bn banking fines should go to community charities

After Chancellor George Osborne says they should be used for the public good, New Philanthropy Capital suggests charities should benefit from the fines

City of London
City of London

The think tank New Philanthropy Capital has called for a cut of the £2.6bn in foreign exchange banking fines to go to community charities.

Announcing the fines in an interview with BBC News on Wednesday morning, George Osborne, the Chancellor of the Exchequer, said that the fines – levied on five banks for attempting to manipulate foreign exchange rates – would be used for the "wider public good", but it had not yet been established where exactly the money would go.

The Treasury is understood to be giving consideration to how the money it raises through fines paid by HSBC, the Royal Bank of Scotland, UBS, JP Morgan Chase, Citibank and Bank of America will be used.

Dan Corry, chief executive of NPC, said that because unprecedented levels of public money had gone into propping up banks since 2008, some of the money raised by the fines should be ring-fenced for the communities hardest hit by the recession.

"Small, local charities, often working in areas of deprivation, have played a key role in holding communities together," he said in a statement. "The reduction in local authority funding means they are already facing a struggle to stay afloat, and even a small proportion of the billions levied against the banking sector today could secure charities' futures for years to come. Where these charities are doing effective, important work, the government should help them."

Corry said that such a move would demonstrate a commitment to social fairness by the government and urged it to make it the norm for regulatory fines to be directed towards charitable causes.

The five banks were fined by the UK's Financial Conduct Authority and two US regulators – the Commodity Futures Trading Commission and the Office of the Comptroller of the Currency – after a 13-month investigation.

Last month, the government awarded almost £10m of funds collected from fines levied on banks for manipulating Libor – an interbank exchange rate – to the mental health charity Mind, the Fire Fighters Charity and a number of charities that provide support to the bereaved families of emergency services personnel.

Previously, grants from Libor fines were awarded to a number of cause areas, including £35m to military causes, £60m to support armed forces personnel and £10m to set up a fund to support uniformed youth charities.

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