The U.K. government said this week that bankers who participated in manipulation of the London interbank offered rate will face criminal charges.
Greg Clark, the financial secretary to the U.K. Treasury, said he would criminalize attempts to manipulate key benchmark rates like Libor as part of a larger effort to reform the rate following reports of rate-rigging earlier this year, Scotsman.com reports.
Clark said that recommendations by Martin Wheatley, the managing director of the Financial Services Authority, including a proposal to eliminate the British Bankers’ Association as head of Libor-setting, would be accepted in full.
The BBA said on Wednesday that it was considering the establishment of an independent professional group for bankers, which could force out those bankers who breach professional standards, according to Scotsman.com.
Legal changes necessary to reform rate-setting will be included in the financial reform bill, which is currently set before parliament and scheduled to receive royal approval next year.
“The government’s changes to legislation will ensure that those that attempt to manipulate Libor face the full force of the law,” Clark said, according to Financial Times. “But this is just one part of the process, the banks and the BBA will have to play their part to ensure that reform is effective and Libor’s reputation is restored.”
The legislation will also remove responsibility for markets and enforcement, including Libor, and allocate it to a newly created Financial Conduct Authority to be headed by Wheatley.
“The government is determined to restore the credibility of Libor,” Clark said, Financial Times reports. “That is why we have accepted Martin Wheatley’s recommendations in full and will begin the process of implementing them without delay.”