New proposals set out for Libor system - Banking - News - Moneyfacts


New proposals set out for Libor system

New proposals set out for Libor system

Category: Banking

Updated: 10/08/2012
First Published: 10/08/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Initial proposals to reform the flawed Libor rate setting process have been announced today by the managing director of the Financial Services Authority (FSA), Martin Wheatley.

In an initial review paper, Mr Wheatley claimed the current rate setting process was 'no longer viable' and that inter-bank lending rates should be set based on actual market data rather than independent submissions from banks.

He added that plans for stricter regulation and stronger sanctions would combat abuse of the system.

The British Bankers' Association is currently responsible for overseeing the process, although it is not regulated by the FSA or the Bank of England.

The proposals set out to overhaul the current system, which has been heavily criticised following the Libor rate fixing debacle which resulted in Barclays being fined a record £290 million.

Mr Wheatley said: "Libor is something that is fundamental to the smooth running of markets, and to confidence in the financial system.

"Retaining Libor unchanged in its current state is not a viable option, given the scale of identified weaknesses and the loss of credibility that it has suffered."

Find the best bank account for you - compare bank accounts

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

More people are switching current accounts

Competition in the current account market remains intense, which means if you’re not happy with your account for any reason, now’s a great time to switch! Happily, more and more people seem to be getting in on the switching action...

Financial services complaints continue to fall

Many people feel dissatisfied with their financial providers at times, but happily, it looks as though the most serious complaints are becoming less and less common.

Contactless spending hits yet another record

Contactless spending is going from strength to strength, hitting new records on a seemingly monthly basis - and it’s just broken yet another one, with monthly contactless spending having passed the £2bn mark for the first time.