Parliament to look into standards at rate-rig row banks

The inquiry was announced by David Cameron yesterday after Barclays chairman Marcus Agius quit over the affair and amid fresh calls for the bank’s chief executive Bob Diamond to resign.

Chancellor George Osborne said the review would look at “transparency, conflicts of interest, culture and the professional standards” in the banking industry.

Dismissing Labour’s calls for an independent, Leveson-style investigation, he said: “I don’t think a long costly public inquiry is the right answer. It would take months to set up and years to report. We know what went wrong. We can’t wait until 2015 or 2016 to fix it.”

The inquiry, chaired by Treasury Select Committee chairman Andrew Tyrie, will have powers to summon witnesses, take evidence under oath and access official papers and will report back by the end of the year. And its recommendations, if accepted, will be built into the Banking Reform Bill next year along with proposals set out by the Independent Commission on Banking.

An independent review of the regulation of Libor, the inter-bank lending rate at the centre of the scandal, will also take place, headed by Financial Conduct Authority chief Martin Wheatley.

His review will also look at the adequacy of the UK’s current civil and criminal powers of sanction over financial conduct and market abuse, which have been called into question as the Serious Fraud Office considers whether it is “appropriate and possible” to press charges against any of the banks under investigation.

In a statement yesterday, the department said it hoped to have decided within a month.

Mr Osborne welcomed the news and also announced the Government would change the Financial Services Bill currently going through Parliament to ensure banking fines go to the taxpayer.

The measure would apply to fines since April, including the record £290m penalty imposed on Barclays last week.

Labour leader Ed Miliband has vowed, however, to keep pushing for a “full and open” independent inquiry.

He told the Commons: “However able or distinguished, politicians investigating bankers will not command the consent of the British people. People are understandably angry about the way their banks let them down and I don’t believe the proposed way forward is the way we can build the consensus that is required for change.”