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Government to implement all Wheatley’s LIBOR changes


The Government has accepted all recommendations contained in the Wheatley review into overhauling the LIBOR.

It means that the British Banking Association (BBA) will lose its role as LIBOR administrator with former 3i chairman Baroness Hogg heading the taskforce to find an appropriate successor.

The move follows strong criticism of the way BBA ran Libor, although it argued it was not directly responsible for compiling the rate. While the BBA has published the rate since 1986, it has never been directly regulated, despite the special role it has as a key global benchmark used by banks to lend to companies and individuals.

Financial Secretary to the Treasury, Greg Clark, said:

‘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 that 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.’

Other changes the Government has vowed to make following the review by the FSA’s managing director, include creating a new criminal offence for misleading statements in relation to benchmarks such as LIBOR, as well as amending the language of existing offences.

It also aims to provide the new Financial Conduct Authority (FCA) with a specific power to make rules requiring banks to submit to LIBOR, with reference to a Code of Practice produced by the rate administrator.

The changes follow a string of dramatic turns in the Libor scandal including the resignation of former CEO of Barclays, Bob Diamond, and a subsequent £290m fine for Barclays over the Libor rate’s rigging.

The saga is set to continue as further investigations into how other major banks could have conspired to influence the level at which Libor are set to take place.

Lloyds Banking Group and Royal Bank of Scotland are among the banks currently being investigated.

Published 18 October 2012

SOURCE: CCH Online

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