FSA boss Lord Turner criticises Libor traders

Bankers who attempted to rig the Libor rate were driven by “cynical greed”, the boss of the City watchdog said today.

Their acts had dealt "a huge blow" to the industry's reputation, the Financial Services Authority (FSA) chairman Lord Turner told its annual meeting.

He said such behaviour was "far too prevalent" before the financial crisis and called for the industry to be purged of "a culture of cynical entitlement".

The banking sector faced a "major challenge" in refocusing on its key functions such as raising capital for companies and helping customers manage risk, he added.

He said: "The cynical greed of traders asking their colleagues to falsify their Libor submissions so that they could make bigger profits has justifiably shocked and angered people, in particular when we are facing hard economic times provoked by the financial crisis.

"But sadly it is clear that the behaviours evidenced in the Libor case were not, in the years before the crisis, confined to this specific area of financial activity."

He also pointed to mis-selling scandals, such as payment protection insurance, as being symptomatic of a "crisis of trust and reputation" faced by significant parts of the UK's financial services industry.

He hit out at a "cynical willingness" of traders to sell securities "whose value they doubted to customers whose judgment they disparaged".

They had "eroded customer confidence that the industry is looking after its customers' rather than its own interests", he added.

He was speaking at the FSA's last annual meeting. Next year, the FSA will be split into two - the Prudential Regulation Authority, which will sit within the Bank of England, will focus on managing individual banks' stability. Meanwhile, the Financial Conduct Authority will be a new independent body regulating markets and how financial services firms behave.

PA