I can confirm to the Noble Lord that the information I provided him in response to his written question answered on 17th June 2013 remains accurate:

US investigations and enforcement action on HSBC focused on their subsidiaries in the US. The Financial Conduct Authority (FCA) has no direct supervisory remit over these HSBC entities.

However, in conjunction with the action taken by the US, the (then) FSA, as lead regulator for the HSBC Group globally, made a number of requirements of HSBC Holdings plc, designed to ensure that all parts of the HSBC Group are compliant with the relevant legal and regulatory requirements across the Group to prevent similar failings occurring in future.

This included requiring a committee of the HSBC Board to oversee matters relating to anti-money laundering, sanctions, terrorist financing and proliferation financing; requiring the Group to revise its policies and procedures to ensure that all parts of the HSBC Group are subject to standards equivalent to those required under UK requirements; HSBC employing an independent monitor to oversee the Group's compliance with UK anti-money laundering, sanctions, terrorist financing and proliferation financing requirements and to provide independent reporting to the HSBC Board committee and regulators. HSBC Holdings was also required to appoint a Group Money Laundering Reporting Officer (MLRO), with responsibility for ensuring that systems and controls are in place across the Group.

The FCA is closely monitoring the implementation of these requirements by HSBC.

Since June 2012, HM Treasury has received LIBOR fines from the Financial Conduct Authority (FCA), which the Chancellor has chosen to use to help and support those who demonstrate the very best values in our society. There have been announcements around LIBOR fines made at each Autumn Statement and Budget since 2012.

Since June 2012, the Treasury has received LIBOR fines from the FCA; to date, they have imposed total fines in excess of £450 million relating to its investigations of LIBOR manipulation. This Government promised that this policy would reflect that those who have paid fines in our financial sector, because they demonstrated the very worst of British values, are paying to support those in our Armed Forces and emergency services who demonstrate the very best of British values. We are working with OGDs and relevant charities to ensure that all LIBOR fines received to date will be committed within the life of this Parliament.

The administration of LIBOR fines varies according to the type of organisation applying and receiving the money. In particular, where a Government Department, such as the MoD has been identified as the organisation best suited to deliver the outcome – for example, support for childcare at military establishments – normal Departmental processes have applied. In other circumstances – such as those in support of the Armed Forces Covenant, the Covenant Reference Group – a cross-Whitehall representative body which includes charity representation, provides the guidance on those areas where LIBOR funds could be used to best effect.

Since June 2012, the Treasury has received LIBOR fines from the FCA; to date, they have imposed total fines in excess of £450 million relating to its investigations of LIBOR manipulation. This Government promised that this policy would reflect that those who have paid fines in our financial sector, because they demonstrated the very worst of British values, are paying to support those in our Armed Forces and emergency services who demonstrate the very best of British values. We are working with OGDs and relevant charities to ensure that all LIBOR fines received to date will be committed within the life of this Parliament.

The administration of LIBOR fines varies according to the type of organisation applying and receiving the money. In particular, where a Government Department, such as the MoD has been identified as the organisation best suited to deliver the outcome – for example, support for childcare at military establishments – normal Departmental processes have applied. In other circumstances – such as those in support of the Armed Forces Covenant, the Covenant Reference Group – a cross-Whitehall representative body which includes charity representation, provides the guidance on those areas where LIBOR funds could be used to best effect.

Since June 2012, the Treasury has received LIBOR fines from the FCA; to date, they have imposed total fines in excess of £450 million relating to its investigations of LIBOR manipulation. This Government promised that this policy would reflect that those who have paid fines in our financial sector, because they demonstrated the very worst of British values, are paying to support those in our Armed Forces and emergency services who demonstrate the very best of British values. We are working with OGDs and relevant charities to ensure that all LIBOR fines received to date will be committed within the life of this Parliament.

The administration of LIBOR fines varies according to the type of organisation applying and receiving the money. In particular, where a Government Department, such as the MoD has been identified as the organisation best suited to deliver the outcome – for example, support for childcare at military establishments – normal Departmental processes have applied. In other circumstances – such as those in support of the Armed Forces Covenant, the Covenant Reference Group – a cross-Whitehall representative body which includes charity representation, provides the guidance on those areas where LIBOR funds could be used to best effect.

Since June 2012, the Treasury has received LIBOR fines from the FCA; to date, they have imposed total fines in excess of £450 million relating to its investigations of LIBOR manipulation. This Government promised that this policy would reflect that those who have paid fines in our financial sector, because they demonstrated the very worst of British values, are paying to support those in our Armed Forces and emergency services who demonstrate the very best of British values. We are working with OGDs and relevant charities to ensure that all LIBOR fines received to date will be committed within the life of this Parliament.

The administration of LIBOR fines varies according to the type of organisation applying and receiving the money. In particular, where a Government Department, such as the MoD has been identified as the organisation best suited to deliver the outcome – for example, support for childcare at military establishments – normal Departmental processes have applied. In other circumstances – such as those in support of the Armed Forces Covenant, the Covenant Reference Group – a cross-Whitehall representative body which includes charity representation, provides the guidance on those areas where LIBOR funds could be used to best effect.

The Treasury provides monies allocated as LIBOR fines to the relevant Government Department to administer on its behalf through the normal Estimates process. Full details of all transfers are provided in Departmental accounts.

Because the Treasury provides monies allocated as LIBOR fines to the relevant Government Department to administer on its behalf through the normal Estimates process the normal audit rules are in place as prescribed in Managing Public Money. The Accounting Officer for each Department is responsible for ensuring that the monies are distributed, accounted for and audited correctly.

The money received in penalties for the manipulation of LIBOR, net of enforcement costs, is accounted for in HMT’s annual report and accounts.

The Chancellor has announced that the funds collected from the LIBOR fines will be given to good causes, specifically military and other uniformed charities. The distribution of this funding is accounted for through the relevant department’s annual report and accounts.

The Driver and Vehicle Standards Agency (DVSA) are the main body responsible for enforcement of operator licences for goods vehicles, although individual police forces also have the power to enforce these provisions. DVSA enforcement action consists of prosecution through the courts – in 2013-14 they reported 174 convictions resulting in courts ordering £103,244 in fines. These fines are collected by the courts and all revenue raised is passed on to the Consolidated Fund, and used to fund general government expenditure.

The Government has taken a substantial number of measures to change the culture in UK banking.

This Government supported the work of the Parliamentary Commission on Banking Standards which reported in June 2013 on professional standards and culture of the UK banking sector. Legislation to give effect to its recommendations on banking standards and individual accountability were included in the Financial Services (Banking Reform) Act 2013. The Financial Conduct Authority, the Prudential Regulation Authority and the Treasury worked through 2014 to prepare secondary legislation, regulatory rules and other detailed implementing measures.

The Government expects to announce the final timetable for implementing these reforms shortly.

In the Financial Services Act 2012, this Government introduced a new criminal offence to address the issue of the manipulation of the LIBOR interest rate benchmark. In December 2014 the government announced that this offence would be extended to cover a further seven financial benchmarks from, subject to Parliamentary approval, 1 April 2015.

We also recognise that there is more to do if the banking industry and global financial markets are to regain public trust. The Chancellor of the Exchequer therefore announced in his Mansion House speech in June 2014 a Treasury, Bank of England and FCA review of the operation of the foreign exchange, fixed income and commodity markets. The Fair and Effective Markets Review will examine how trust and credibility in these markets can be restored. The review will report in June 2015.

In November 2014 the Financial Conduct Authority (FCA), in co-ordination with financial regulators in the US and Switzerland, announced the outcome of its investigations into attempted manipulation of foreign exchange markets by 5 banks. It imposed penalties on 5 banks totalling £1.11 billion. In addition the Director of the Serious Fraud Office opened a criminal investigation into allegations of fraudulent conduct in the foreign exchange market in July 2014. The Government does not comment on ongoing investigations, so as not to prejudice these inquiries.

Ensuring that firms incentivise employees to behave in the right way is essential to restoring public trust in financial services. The Fair & Effective Markets Review’s scope covers trading practices in markets, and drivers of behaviour including incentives for individuals. In November 2014 the Chancellor wrote to the Governor of the Bank of England to ask that the increasing levels of fixed remuneration in the financial sector following the introduction of the ‘bonus cap’ be considered as part of this work.

This is an operational matter for the Financial Conduct Authority (FCA), who are operationally independent from Government.

The question has been passed on to the FCA. The FCA will reply directly to the Noble Lord by letter. A copy of the letter will be placed in the Library of the House.

This question has been passed on to the FCA. The FCA will reply to the Noble Lord directly by letter. A copy of the response will be placed in the Library of the House.

The Treasury is responsible for ensuring there is proper accountability to Parliament for the use of public money. It is responsible for setting the ground rules for the administration of public money and is accountable to Parliament for doing so.

The guidelines for managing public expenditure have been set out in a number of documents published by the Treasury, including Managing Public Money[1], the Consolidated Budgeting Guidance[2] and Improving Spending Control[3]. They set out the circumstances where the Treasury may impose fines or penalties on departments. In all cases, the Treasury retains the right to apply whatever penalties are appropriate to incentivise good financial management and value for money.

Fines imposed on departments have had a minimal impact on the Government’s overall resources.

Accounting Officers are responsible for ensuring that their departments meet specific standards, as set out in Managing Public Money. The Chief Secretary will write to the Secretaries of State and the Head of the Civil Service where he is concerned that Accounting Officers may fall short in fulfilling their responsibilities for managing public money. Should an Accounting Officer fall short of the standards required he or she may have their designation as Accounting Officer withdrawn, which may lead to termination of employment.

[1] https://www.gov.uk/government/publications/managing-public-money

[2] https://www.gov.uk/government/publications/consolidated-budgeting -guidance

[3] https://www.gov.uk/government/publications/improving-spending- control

I can confirm that the £35m of LIBOR fines announced by the Chancellor in October 2012 has been allocated in the following way:

(1) In England 37 Charities received £10,556,547.63.

(2) In Scotland 12 Charities received £5,455,310.00.

(3) In Wales 3 Charities received £2,406,846.89.

(4) In Northern Ireland 1 Charity received £50,000.00.

In addition, 40 UK wide projects were awarded £16,167,817.90.

To date, two British-based banks have been fined by the Financial Services Authority (FSA) and other regulatory authorities. The fines are imposed to punish the misconduct that has taken place and to deter future misconduct of a similar nature. Barclays was fined £59.5 million by the FSA for misconduct which breached its principles for business and fined $360 million by US regulators. The Royal Bank of Scotland was fined £87.5 million by the FSA for misconduct which breached its principles for business and fined $475 million by US regulators.

The Government have made it clear to RBS that, on this occasion, the US fines should be met in full from past, present and future reductions in bonuses and variable remuneration for RBS, and not by the taxpayer.

My Lords, the Financial Services Authority awards discounts for early settlement of cases involving financial penalties, as it considers early settlement to be in the public interest. The Government take the manipulation of LIBOR and EURIBOR very seriously. We accepted the weekly review recommendations on LIBOR, and are implementing them in full. Furthermore, we are ensuring that the money raised from these fines will go to specific causes which demonstrate the best of British values.

My Lords, does the noble Lord find it as astonishing as I do that, on an issue like interest rates, which is obviously of great concern both nationally and internationally, nobody in the Bank of England or the Treasury had the faintest idea about what was going on with LIBOR?

My Lords, would my noble friend agree that the general public are somewhat bemused by the large sums of money involved in these transactions and are even more puzzled as to why there seem to be very few people who have been either prosecuted or convicted with penalties affecting the individuals concerned? Could my noble friend comment on that?

My Lords, before asking my question, I wonder if the noble Lord could clarify part of his answer to the noble Lord, Lord Bates, where he referred to the “attempted” manipulation of LIBOR. Is he saying that the manipulation failed? Turning to the Question, when I was a member of the Regulatory Decisions Committee of the Financial Services Authority, discounts on penalties were offered for early settlement only in cases where either the firms had reported their own failings or they had offered exceptional levels of co-operation. Did either of these circumstances apply in this case to British banks prior to measures taken by the American authorities?