The Treasury said that whilst the Financial Services Authority (FSA) will be allowed to keep some of the money stemming from the fines it issues to firms in order that the regulator can "cover enforcement case costs for the year", it said it will collect any excess money above that amount.
The Treasury said that it had back-dated the new regime to the beginning of April this year in order that the penalties Barclays agreed to pay to settle misconduct charges over the "attempted manipulation" of the London Interbank Offered Rate (LIBOR) were within the scope of collection.
The British Armed Forces community will be provided with £35 million from the "fines imposed for attempted LIBOR manipulation and other unacceptable behaviour" this year, it said.
"The new arrangements will apply to all fines imposed by new Financial Conduct Authority and Prudential Regulation Authority; and to fines imposed by the Bank of England in the course of exercising its regulatory powers in relation to financial services," the Treasury said.
"Compliant financial services firms will still be protected from paying costs directly attributable to the misconduct of others, as the regulators will be able to cover enforcement case costs for the year from penalties before revenue is passed to the Treasury," it added. "However, in future any benefit above these costs will go to the taxpaying public, rather than the financial services industry."