The Serious Fraud Office will investigate the Libor rate-fixing scandal centred around Barclays, which could lead to criminal prosecutions for the bankers involved.
The decision comes following pressure from politicians and the public to take action against the individuals that instigated the rigging of London inter-bank offered rates (Libor), the interest rate at which banks lend to each other.
In a brief statement the Serious Fraud Office (SFO), an independent government agency, said it had ‘decided formally to accept the Libor matter for investigation’.
The SFO is responsible for investigating and prosecuting serious and complex fraud, with powers derived from the Criminal Justice Act (1987), which means that bankers found to have fixed rates could face charges of theft, false accounting and fraud.
Barclays bankers face charges
Barclays was fined £290m for lying about Libor rates, which has a knock-on effect on the price of mortgages and personal loan agreements for consumers. Barclays chief executive officer Bob Diamond resigned following the scandal and faced questions from the Commons Treasury Select Committee last week, which failed to yield many answers.
A recent Which? survey found that eight out of ten people thought that individuals should be personally prosecuted if banks are found to have broken the law.
The Treasury will reportedly give the SFO an extra £3m to launch the investigation, while the Financial Services Authority may offer the services of some of its staff to aid the process, which will include several other banks in addition to Barclays.
Which? calls for urgency on banking reform
The government has committed to amend the Financial Services Bill to allow the revenue from fines to go to ‘the benefit of the public rather than the benefit of authorised persons’ but Which? is calling for banking reforms to not be delayed.
Which? Chief executive Peter Vicary-Smith said: ‘We’re now two years on from our report and a year on from Vickers – the time has come for action not speeches.
‘We need to see the banking sector referred to the Competition Commission now to break the dominance of the big banks, the ring-fence between investment and retail banking brought in as soon as possible rather than in 2019, and tangible action on tackling the corrosive banking culture to turn this sector into a profession we can all trust again.’
- Want to know more about Libor? – read our 60 second guide to Libor
- Looking to switch banks? – use our simple guide to switching current account
- If you need to speak to a money expert – call the Which Money Helpline