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Government announces new banking inquiry
(Update) The government has launched a formal inquiry into banking standards in the wake of the Barclays rate-rigging scandal. Fines paid by banks will go to the Treasury in future.
(Update) Prime minister David Cameron today announced that there will be a formal inquiry into banking standards following Barclays’ shocking rate-rigging revelations.
Barclays was fined a record £290 million by UK and US regulators last week after it emerged the bank had manipulated the Libor interbank lending rate during the credit crunch. Other banks, including Lloyds, HSBC and RBS, are thought to also be involved.
The cross-party inquiry, which is to be led by Conservative MP and head of the Treasury Select Committee Andrew Tyrie, will begin ‘immediately’, Cameron said.
The committee will have the power to take evidence under oath from those involved and will have full access to papers, officials and ministers, including those from the present and last government, so it can ‘get to the truth and make sure this never happens again’.
The inquiry comes just weeks after the government published its white paper on banking reforms, following the recommendations put forward by Sir John Vickers in his Independent Commission on Banking (ICB) report.
Cameron said he wanted the inquiry completed before Vickers' bill is introduced in January so that its findings can be put into the bill.
'Let's 'get on with it, find the answers and put it into law', he urged.
Ed Balls, Labour's shadow chancellor, said the government's decision not to go ahead with an independent and judge-led inquiry 'will not do', describing the inquiry as an 'inadequate and weak plan' which has been 'cobbled together'.
Chancellor George Osborne, however, defended the coalition's decision and said he did not think that a long, costly public Leveson-style inquiry was the right answer. 'We know what went wrong,' he said.
Osborne also revealed that there will be an investigation into the regulation and operation of Libor led by Martin Wheatley, head of the new Financial Conduct Authority; a review of the regulator's powers and a change to the Financial Services bill to ensure that the multi-million pound fines paid by British banks and financial firms go to the taxpayer.
Both Bob Diamond and Marcus Agius are due to appear before MPs on the Treasury Select Committee on Wednesday and Thursday this week.
The Serious Fraud Office, meanwhile, said it was working closely with the Financial Services Authority (FSA) and investigating if it is ‘appropriate and possible’ to bring criminal prosecutions against the bank. It hopes to have a decision within the month.
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