Barclays’ penalty of £290m for manipulating Libor interest rates ‘highlights the corruption at the heart of our banking system’, says Which? Chief Executive Peter Vicary-Smith.
Earlier this week, Barclays was fined £59.5m by the the Financial Services Authority (FSA), $200m by the US Department of Justice and $160m by the US Commodities and Futures Commission (CFTC).
Government must fast track banking reform
Which? Chief Executive Peter Vicary-Smith said: ‘Once again another scandal highlights the corruption at the heart of our banking system, with no individuals held to account and senior bankers behaving as if they are above the law. Four years on from the financial crisis there is no evidence that the worst culture and practices in banking have changed at all.
‘The government must now fast track plans to reform the industry and ringfence ordinary retail banking services from the toxic activities of their investment banking arms.’
Need for a strong regulator and scrutiny of BBA’s role
He continued: ‘Until we get a tougher regulatory watchdog who will stand up to powerful banks on behalf of consumers the change we need simply won’t happen. The Financial Services Authority should be open and transparent about the cost to ordinary borrowers of these rigged interest rates, and if people have lost out the banks should be forced to compensate borrowers.
‘The British Bankers Association (BBA), which is so visible when it campaigns against banking reform yet today is silent, must not escape scrutiny for its role in managing the Libor scheme. It is surely time for this crucial function to be handed to an accountable authority capable of ensuring the information provided by banks is robust.’
FSA fines should benefit consumers, not banks
Responding to George Osborne’s comments that fines to the FSA should be going to the public not financial institutions, Mr Vicary-Smith said: ‘We’re pleased that the Chancellor is looking again at what happens to the fines imposed on banks when they break the rules. We have been calling for these funds to benefit consumers directly for example through independent debt advice and financial education for young people. It’s a joke that currently any proceeds from fines are recycled in reduced industry levies the following year.’