FSA Investigation into LIBOR

Baroness Kramer Excerpts

Thursday 28th June 2012 Lords Chamber

[Baroness Kramer]

My Lords, the public are rightly outraged by the manipulation of interest rates and Europe is going to look more suspiciously at London just at a time when we are trying to protect the City. So there are great issues at stake.

Will the Minister explain why the FSA’s fine on Barclays is so small? As far as the company is concerned, £59.5 million is a freckle and far less than the fine in the United States. Surely it is not the senior regulator in this case. Why are there no sanctions at all—we are not just talking about criminal sanctions—against anybody senior? It is one thing to go after the traders but systematic mismanagement and manipulation of the market over four years surely affects senior people and has to engage them. The questions are to be asked by the Treasury Select Committee, which is an outstanding Committee, but surely they should be coming from the regulator with the ability to follow with direct sanctions.

Lastly, it is crucial that the Financial Services Bill is looked at again because, although we have a new form of regulator coming in the FCA, which I hope will be rigorous and effective, we must ensure in this Bill that the regulator has real teeth so that there is fear when that regulator looks again at this kind of mismanagement, and a fundamental change in behaviour.

[Lord Sassoon]

My Lords, I share the concerns of my noble friend. This is the largest fine ever imposed by the FSA. The US comes at this in a different way in many respects so the seriousness of the issue is demonstrated by the size of the fine in relation to anything else that has ever been done by the FSA in this country. It is the largest. The FSA sets the fines and it should do so. This has to be an independent process and I am sure nobody would want the Government involved in it.

As far as the investigations are concerned, my noble friend may be jumping ahead of the ongoing investigations by the FSA and SFO. I do not know where they will come out or who will be involved, but those investigations are going on. As for a powerful regulator for the future that is able to do this, I could not agree with her more. The FSA model completely failed. As I have already explained, the Financial Conduct Authority will be focused and will have as a core objective the integrity of markets. It will be much better placed to deal with these kinds of problems as they come up in future.