FSA demands new legal powers after Libor manipulation scandal
The Financial Services Authority is proposing tough new powers to tackle banking malpractice in the wake of the Libor-rigging scandal.
The FSA's proposals come as
Martin Wheatley, the chief executive-designate of the Financial Conduct
Authority, is expected to propose a fundamental overhaul of the way the
inter-bank lending rate is set when his government-commissioned review reports
this week. Photo:
PA
The watchdog has called for "exemplary sanctions" and "forceful punishment"
of bankers who are caught breaching regulations to make them an example in an
industry where investigating malpractice is difficult.
The individuals who set Libor could also come under the
regulatory umbrella.
The FSA's proposals come as Martin Wheatley, the chief executive-designate of
the Financial Conduct Authority, is expected to propose a fundamental overhaul
of the way the inter-bank lending rate is set when his government-commissioned
review reports this week.
In submissions to the Parliamentary Commission on Banking Standards, the FSA
suggests exercising an appointment power over bankers whose information helps to
calculate Libor, by adding them to its "approved person" register.
The agency would assess whether they were "fit and proper" people who had
"honesty, integrity and reputation" before they took the role.
Bob Diamond, the bank's chief executive, and Marcus Agius, its chairman, both
resigned over the scandal. Jerry del Missier, its chief operating officer, also
left the bank, although no findings had been made against any of the three.
In a report on the issue, the Treasury Select Committee criticised Mr Diamond's evidence in its hearings on Libor, saying it "fell well short of the standard that Parliament expects, particularly from such an experienced and senior witness".
Mr Diamond has made it clear that he believes his evidence to the committee was accurate.
Regulators have said they were also investigating 16 other banks over rigging.
In a report on the issue, the Treasury Select Committee criticised Mr Diamond's evidence in its hearings on Libor, saying it "fell well short of the standard that Parliament expects, particularly from such an experienced and senior witness".
Mr Diamond has made it clear that he believes his evidence to the committee was accurate.
Regulators have said they were also investigating 16 other banks over rigging.
