The Government accepts the recommendations of Martin Wheatley's independent review in full.
Today the Government re-affirmed its commitment to reforming the submission and administration of the London Interbank Offered Rate (LIBOR) benchmark by accepting the recommendations of Martin Wheatley’s independent review of LIBOR in full.
The Government has been absolutely clear since the LIBOR scandals emerged in June this year that any attempt to manipulate this important international benchmark is unacceptable and those that do so must be punished.
Immediate steps will now be taken to ensure that those who use and rely on LIBOR for trillions of dollars of transactions globally can have confidence in its integrity and the supervisory regime that underpins it.
In particular, the Government will amend the Financial Services Bill, which is currently before Parliament:
- to bring LIBOR activities within the scope of statutory regulation, including the submission and administration of LIBOR
- to create a new criminal offence for misleading statements in relation to benchmarks such as LIBOR, as well as amending the language of existing offences
- 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 Government believes that the current LIBOR administrator and the banks have to take responsibility for their failings and act upon Mr. Wheatley’s recommendations, including the removal and replacement of the British Bankers’ Association (BBA) as operational LIBOR administrator. Baroness Hogg will now lead a panel that will identify an appropriate successor to the BBA.
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.
Notes for Editors
Information on Baroness Hogg.
The final report ‘The Wheatley Review in Libor’ was published on 28 September 2012:
- The Wheatley Review of Libor: final report
- The Wheatley Review into LIBOR: initial discussion paper
The Government set up an independent review on the regulation of Libor in July and asked Martin Wheatley (CEO designate of the Financial Conduct Authority) to be chair. It reported to the Cabinet Committee on Banking Reform, chaired by the Chancellor, with the Secretary of State for Business, Innovation and Skills as Vice-Chair.
Legislative changes will be included as amendments to the Financial Services Bill or the Banking Reform Bill.
Further information about the review, including its terms of reference, can be found in The Wheatley Review section of the website.