Inter-bank lending to be reviewed

 

An urgent independent review into the inter-bank lending rate is to be set up by the Government next week in the wake of the interest rigging scandal.

The review will consider the future operation of the Libor rate and the possibility of introducing criminal sanctions, a Treasury source said.

Bob Diamond, the chief executive of Barclays - the first bank to be exposed in the scandal - has been summoned to appear before the Treasury Select Committee next Wednesday.

The review comes amid Labour demands for a full public inquiry into the affair.

The Government believes its approach will ensure a speedier response to the issue, resulting in amendments to the Financial Services Bill this summer.

The review will be headed by an as-yet-undisclosed independent figure.

It will look into the current regulatory arrangements for the Libor and whether criminal sanctions for manipulation can be introduced.

Ministers are considering setting up a separate review into the professional standards of bankers.

MPs on the Treasury Select Committee will grill Mr Diamond over who at Barclays knew about the Libor "scam" and how the issue had been dealt with.

The committee has also asked the bank's chairman Marcus Agius and other non-executives to appear on Wednesday.

Committee chairman Andrew Tyrie, a Conservative MP, said: "The Libor interest rate benchmark - crucial to transactions right across the economy and affecting millions of people - was systematically rigged over a period of years.

"It appears that many banks were involved and Barclays were the first to own up. This is the most damaging scam I can recall.

"The reputation of Britain's financial services industry has been severely tarnished, albeit unfairly for the overwhelming majority unconnected with the scam.

"The public's trust in banks has been even further eroded. Restoring the reputational damage must begin immediately.

"Parliament and the public need to know what went wrong and whether the perpetrators have been rooted out.

"We also need to be given confidence that this has been put right."

Labour leader Ed Miliband accused the Government of adopting "sticking-plaster solutions" and criticised the Prime Minister as being "out of touch".

"I have news for David Cameron: the people of this country want a moment of reckoning for our banks," he told a Fabian Society conference in London.

"The British people will not tolerate the establishment closing ranks saying we don't need an inquiry.

"They want a light shone into every dark corner of our banking system. They want bankers held to account. They want the system rebuilt.

"Nothing less than a full public inquiry can do that. Sticking-plaster solutions will not heal this wound.

"Nobody has confidence that the current plans of this Government or the industry will be sufficient. Nobody believes either that the scandals of the last week are the end of the story.

"So we need a full, open and independent inquiry which the public can trust."

Mr Cameron told TV reporters: "It's very important, above all, that government takes all of the actions necessary, holding bankers accountable, making sure they pay their taxes, making sure there's proper transparency, making sure the criminal law can go wherever it needs to, to uncover wrongdoing, all of these things need to happen."

As to calls for an inquiry, he said: "Let's take our time, think this through carefully... That's what I'm determined to do, and that's what we will do."

Shadow chancellor Ed Balls said the Government's review was not enough.

"This limited review is welcome and overdue, but it does not go far enough. We need the proper independent and public inquiry into the culture of banking that Ed Miliband and I have demanded.

"The Libor arrangements in place now date back to the 1980s. They are a clear example of failed self-regulation. But the Government has been dragging its feet on reform in this area.

"Even when this scandal was starting to emerge in March this year, when we raised this issue as the Financial Services Bill was being debated, why did Treasury ministers complacently refuse to even consider change? Why has the Chancellor been so reluctant to act?"

A Treasury source said: "No one would be happier than the Government to see Ed Balls in the witness stand, but the urgent priority for the country is clearing up the mess people like he made."

Financial Secretary to the Treasury Mark Hoban said the review would ensure there would be no repeat of the scandal.

"One of the things with this Libor scandal is that because of the regulatory regime the previous government designed there wasn't an offence around fixing the rate of Libor," he told Sky News.

"We are going to rectify that. That's why we are launching an independent review next week."

PA

Start your day with The Independent, sign up for daily news emails
Life and Style
love + sex
Arts and Entertainment
Victoria Wood, Kayvan Novak, Alexa Chung, Chris Moyles
tvReview: No soggy bottoms, but plenty of other baking disasters on The Great Comic Relief Bake Off
Sport
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle 0 Man United 1: Last minute strike seals precious victory
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
Arts and Entertainment
Seth Rogan is one of America’s most famous pot smokers
filmAmy Pascal resigned after her personal emails were leaked following a cyber-attack sparked by the actor's film The Interview
News
Benjamin Netanyahu and his cartoon bomb – the Israeli PM shows his ‘evidence’
people
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
80s trailblazer: comedian Tracey Ullman
tv
News
i100
Life and Style
A statue of the Flemish geographer Gerard Kremer, Geradus Mercator (1512 - 1594) which was unveiled at the Geographical Congree at Anvers. He was the first person to use the word atlas to describe a book of maps.
techThe 16th century cartographer created the atlas
Arts and Entertainment
Stephen Tompkinson is back as DCI Banks
tvReview: Episode one of the new series played it safe, but at least this drama has a winning formula
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Christine McCleave: FP&A Analyst

£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
Leonora Carrington transcended her stolid background to become an avant garde star

Surreal deal: Leonora Carrington

The artist transcended her stolid background to become an avant garde star
LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

Education: LGBT History Month

Pupils have been discussing topics from Sappho to same-sex marriage
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

Cricket World Cup runs riot to make the event more hit than miss...

The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot