The U.K.’s opposition Labour Party demanded the introduction of a new economic-crime law to help prevent future financial scandals such as the manipulation of the benchmark Libor rate.
The party’s home-affairs spokeswoman, Yvette Cooper, will say today that the law would provide clarity for the police and prosecutors and determine which agencies should tackle financial fraud.
“Look at the Libor scandal that emerged this summer,” Cooper will tell her party’s annual conference in Manchester, northern England, according to remarks released by her office. “It is a multibillion-pound fraud. People were fiddling figures to get rich, while small businesses paid the price. Yet no one has been arrested.”
Financial Services Authority Managing Director Martin Wheatley called last week for oversight of the London interbank offered rate to be handed to the U.K.’s financial regulator under proposals designed to revive confidence in the tarnished benchmark.
Wheatley carried out a review at the request of Chancellor of the Exchequer George Osborne after Barclays Plc, Britain’s second-biggest lender, paid a record 290 million-pound ($468 million) fine in June for manipulating Libor, which is managed by the British Bankers’ Association and used to set rates for more than $300 trillion of securities.
“Governance of Libor has completely failed,” Wheatley said. “This problem has been exacerbated by a lack of regulation and a comprehensive mechanism to punish those who manipulate the system.”
At least a dozen banks are being probed by regulators worldwide over allegations they colluded to manipulate the benchmark to profit from bets on derivatives. The U.K. Serious Fraud Office opened a criminal case in July. U.S. investigators conducting a criminal have asked their British counterparts for permission to interview London traders, two people familiar with the investigation said.
“The police and the SFO don’t even seem to know where to start,” Cooper will say today. “In the United States they have seen 800 prosecutions for serious fraud since 2011. Here in the U.K. the SFO pursued just 20.”