Financial watchdog ready to act on Budget bank tax leak

Summarised from 3 outlets · Updated 3 Nov, 20:52 · Archive

The Financial Conduct Authority said it stands ready to investigate a potential leak of market-sensitive information about bank taxes before the October 28 Budget.

The Financial Conduct Authority has said it stands ready to investigate a potential leak of market-sensitive information about planned changes to bank taxes before Chancellor John Healey delivered his Budget last week. A Bloomberg report published on Wednesday morning, hours before the fiscal statement on 28 October, contained accurate details of the planned increase to the bank corporation tax surcharge, stating it would not return to the previous 8 per cent level and would therefore be less severe than some in the sector had expected.

Bank shares rose following the Bloomberg article. According to City AM, shares in Lloyds and Natwest climbed as much as four per cent before the levy was formally announced, while Barclays jumped 3.7 per cent.

Treasury Committee chairwoman Dame Meg Hillier wrote to the FCA expressing concerns that the leak of market-sensitive information may have led to these share price increases. She said: "This appears to have been more than idle speculation and it had implications for relevant securities."

FCA chief executive Nikhil Rathi responded in a letter published on Tuesday, saying the Treasury and Cabinet Office would be "best placed to ascertain and determine whether and how any unlawful disclosure of inside information may have occurred". He said the FCA "will engage with them accordingly".

Rathi added that the regulator would consider any evidence provided to determine whether action was warranted under market abuse rules. "We stand ready to consider the specifics of any evidence provided to us by Cabinet Office and HMT to decide what, if any, action it is appropriate for us to take," he said. He noted that parliamentary scrutiny and leak inquiries were usually preferred processes for judging political discourse and government communications, but the regulator "may choose to intervene where that discourse, or poor information handling, impacts markets improperly".

How it is being reported

• City watchdog ‘stands ready’ to act on bank windfall tax Budget leakThe boss of the Financial Conduct Authority has said he is prepared to investigate a potential leak of market-sensitive information that sparked a rally in bank shares hours before John Healey’s maiden Budget. In a letter to the Treasury Committee, Nikhil Rathi vowed to engage with Treasury and Cabinet Office officials over how the details [...]City AM · 3 Nov, 16:31
• Financial watchdog ‘stands ready’ to take action over potential Budget leakIt follows concerns a potential leak of market-sensitive information may have led to bank shares increasing in value.Evening Standard · 3 Nov, 14:16
• Financial watchdog ‘stands ready’ to take action over potential Budget leakIt follows concerns a potential leak of market-sensitive information may have led to bank shares increasing in value.Independent Business · 3 Nov, 14:16

In this story: Financial Conduct Authority · John Healey · Meg Hillier · Nikhil Rathi · Bloomberg · Treasury Committee

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