Commenting on the report, the Chairman of the Treasury Select Committee, Andrew Tyrie MP, said:
'As a result of this inquiry, a good deal of further information has now been brought into the public domain.
The Committee has called for action in a number of areas, including: higher fines for firms that fail to co-operate with regulators, the need to examine gaps in the criminal law, and a much stronger governance framework at the Bank of England.
Along with my colleagues on the Treasury Committee, I was shocked when the FSA’s Final Notice against Barclays was first published.
The sustained rigging of a crucial benchmark rate has done great damage to the UK’s reputation. Public trust in banks is at an all time low.
Urgent improvements, both to the way banks are run, and the way they are regulated, is needed if public and market confidence is to be restored'.
Chairman Andrew Tyrie's Comments
1. Manipulation by individuals with the intention of personal benefit
Every witness who appeared before the Committee agreed that these actions were disgraceful.
They were made possible by a prolonged period of extremely weak internal compliance and board governance at Barclays, as well as a failure of regulatory supervision.
Such misconduct is a sign of a culture on the trading floor, and higher up, that had gone badly awry.
2. Manipulation during the financial crisis
The manipulation was spotted neither by the FSA nor the Bank of England at the time. That doesn’t look good.
The evidence that Mr Tucker, Mr Diamond and Mr del Missier separately gave about this manipulation describes a combination of circumstances which would excuse all the participants from the charge of deliberate wrongdoing. If they are all to be believed, an extraordinary, but conceivably plausible, series of miscommunications occurred.
As the Report points out, it remains possible that the information released in the Barclays File Note, regarding a dialogue between Mr Tucker and Diamond, could have been a smokescreen put up to distract our attention and that of outside commentators from the most serious issues underlying this scandal.
Senior management at Barclays were issuing instructions to manipulate artificially the bank’s submissions. It is unlikely that Barclays was the only bank attempting this.
3. Barclays and the FSA
It is clear that what was wrong with Barclays went well beyond LIBOR. The culture at Barclays fell well short of the standards outlined by Mr Diamond in his 2011 Today lecture. The PR and the reality were a long way apart.
It seems that the FSA was on the case. In explaining what was wrong with the culture at Barclays, the FSA showed some welcome evidence of a new, judgement-led regulatory approach. It will be a great step forward if the regulators get away from box-ticking and endless data collection and instead devote more careful thought to where risk really lies. This could reduce the regulatory burden and, at the same time, provide more effective oversight. It will involve a change in culture on the part of the regulators and is a major challenge for the future.
4. The resignations
The FSA were less adroit in their handling of the removal of Bob Diamond. They appeared, initially, to be content to allow Mr Diamond to continue in his role, until public pressure mounted over the LIBOR scandal. Then, without engaging in any formal process, they decided that he should go.
Both responses were misjudged.
Regulators should not decide the composition of boards in response to headlines. Many will agree with the removal of Mr Diamond. However, many will wonder why the regulators did not intervene earlier, for example, at the time of the publication of the Final Notice.
Such an informal approach, as was taken in this case, is open to abuse in the future. The PRA and the Bank need better corporate governance. The absence of a requirement for effective governance in the new regulatory framework is a serious defect of the Financial Services Bill.
5. Evidence received by the Committee from Mr Diamond
Select committees are entitled to expect candour and frankness from witnesses before them. Mr Diamond’s evidence, at times highly selective, fell well short of the standard that Parliament expects, particularly from such an experienced and senior witness'.
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