The Treasury has promised to implement all 10 of Martin Wheatley’s recommendations on reforming the submission and administration of Libor.
In July, chancellor George Osborne commissioned Financial Conduct Authority chief executive designate Martin Wheatley to conduct a review of how the Libor rate is set and governed.
Wheatley’s recommendations, presented to the Government on 28 September, include a new code of conduct for submitters, relieving the British Bankers’ Association of its administrative duties and corroborating Libor by transaction data.
A new administrator will be decided by an independent committee, chaired by Baroness Hogg.
The Government will amend the Financial Services Bill in order to implement the recommendations that require primary legislation, including the introduction of criminal sanctions for any attempted manipulation of the rate, bringing Libor activities under statutory regulation and providing the Financial Conduct Authority with powers to make banks submit to Libor.
Treasury financial secretary Greg Clark says: “The Government is determined to restore the credibility of Libor. That is why we have accepted Martin Wheatley’s recommendations in full and will begin the process of implementing them without delay.
“The Government’s changes to legislation will ensure those that attempt to manipulate Libor face the full force of the law. But this is just one part of the process, the banks and the BBA will have to play their part to ensure that reform is effective and Libor’s reputation is restored.”
In June, the FSA fined Barclays £59.5m for Libor manipulation. Additional fines from the US Commodity Futures Trading Commission and the US Department of Justice brought the total fine imposed on Barclarys to £290m.
The Royal Bank of Scotland is also being investigated over allegations it was involved in Libor manipulation.
Chelsea Financial Services managing director Darius McDermott says: “Any form of financial manipulation should be open to prosecution. If you are doing something that causes people to lose money then it should be viewed as a crime.”