FSA Investigation into LIBOR

Lord Barnett Excerpts

Monday 2nd July 2012 Lords Chamber

[Lord Sassoon]

My Lords, first, I will not comment further on the senior executives of Barclays. Clearly the chief executive is coming before the Treasury Committee later this week and will be asked a lot of questions that will further elucidate those aspects.

On the question of prosecution, the basic flaw is that the setting of LIBOR was not and is not a regulated activity, so the FSA does not have a direct way in. My noble friend is right to be quizzical and shake her head but that is the position as it was under FiSMA and the construct put in place by the previous Government. If the FSA wanted to bring criminal prosecutions, as it has done with the civil settlement, the attempted fixing of LIBOR is an activity that is ancillary to a regulated activity. The construct is difficult and the chairman of the FSA has pointed out the difficulties.

As I said in repeating my right honourable friend’s Statement, most normal people would assume that there was a prima facie case to look at the Fraud Act and false accounting and that is precisely what the SFO was doing. Through the inquiries that are going on, we will look at what needs to be done to plug gaps in the financial services legislation. For the avoidance of doubt, I should tell my noble friend that there will certainly be no retrospective legislation in respect of criminal action because—before anybody else jumps up—it would be against the European Convention on Human Rights. I am sure that my noble friend would not want us to go there—and she acknowledges that.

As to which regulator started work when, I would not rely too much on what the newspapers say. As with all these things, I am sure that in due course the regulators will look into their conduct and the lessons to be learnt. I certainly would not take as gospel the newspaper reports of who started when.

[Lord Barnett]

My Lords, the Minister is obviously aware that this has not just started. It has been going on for years and it could not have involved only Barclays but virtually every major bank, not only in the UK but elsewhere. Barclays could not have been handling this on its own. Listening yesterday to the chairman of the FSA, the noble Lord, Lord Turner—who unfortunately is not in his place—the FSA knew nothing whatever about it, nobody in the Bank of England seems to have known anything about it, and now the noble Lord, Lord Sassoon, tells us that the Treasury has known about it apparently for only a short while. We obviously recognise that to be the truth, but should there not be criticism of some of the people involved here? The sheer incompetence of not knowing anything about it deserves some kind of criticism.

I appreciate that the Minister cannot say that he will listen and change anything, because it is a matter for the Chancellor. However, my noble friend Lord Eatwell put a lot of serious points to him and I hope that he will take them back to the Chancellor to ensure that there are some changes. There should be some changes now.