Osborne pledges criminal action against banks and traders

 
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More action to tackle wrongdoing in the financial sector will be unveiled by Chancellor George Osborne on Thursday.

The measures will include making the manipulation of the foreign currency markets by banks a criminal offence.

In a keynote speech he will promise to target "the unacceptable behaviour of the few and ensure that markets are fair for the many who depend on them".

There has been increasing concern about whether the multi-trillion pound foreign exchange market was rigged.

In his annual Mansion House speech, Mr Osborne will pledge the extension of legislation used to clean up after the Libor interest rate-fixing scandal.

As well as bringing the forex currency market under this legislation, it will be extended to those who trade in commodities, and also to the fixed income market, where the most common type of products traded are bonds.

'Abuses'

The chancellor is also expected to establish a joint review by the Treasury, Bank of England and the Financial Conduct Authority (FCA) to look into how these markets operate.

Mr Osborne will say: "The integrity of the City matters to the economy of Britain.

"Markets here set the interest rates for people's mortgages, the exchange rates for our exports and holidays, and the commodity prices for the goods we buy. I am going to deal with abuses."

A crackdown on malpractice in the financial industry has been gathering pace.

George Osborne George Osborne made his announcement at his annual Mansion House speech

The FCA has stepped up investigations into the sector, and the recent Parliamentary Commission on Banking Standards prompted a new legal regime for executives.

But there has been particular concern recently about the forex market, where traders police themselves.

BBC business editor Kamal Ahmed said: "A new set of storm clouds are gathering over UK banks. The foreign exchange market is under investigation. The allegation is fraud."

'Big fines'

He said: "Companies that operate around the world use the foreign exchange market to buy and sell currencies so that they can trade in different countries.

"Our pension funds also use the market so they can invest globally. If wrongdoing is proved, banks could be facing fines.

Start Quote

We pressed ministers to regulate commodities markets and the full array of financial benchmarks back in 2012, but the chancellor failed to act”

End Quote Cathy Jamieson Shadow Treasury minister

"The chancellor will say that any manipulation could affect the amount people pay for foreign currencies when they go abroad, as well as the amount companies pay."

It has been reported that at least 15 banks are being investigated by regulators around the world for alleged forex manipulation.

Martin Wheatley, the head of the FCA, said recently that the allegations, if substantiated, could be "every bit as bad as Libor".

The Libor revelations involved the fixing of the interest rates at which banks lend to each other. Banks around the world have so far been forced to pay fines totalling more than $6bn.

Also in his speech, Mr Osborne is expected to rule out the UK opting in to European Union rules on market abuse, which are due to come into force in 2016.

The Treasury argues that the UK's own regulations retain the flexibility needed to protect London's role as a global financial sector.

Labour's shadow Treasury minister Cathy Jamieson said the chancellor's review was "too little, too late".

She said: "We pressed ministers to regulate commodities markets and the full array of financial benchmarks back in 2012, but the chancellor failed to act."

 

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  • rate this
    +3

    Comment number 696.

    Gideon, why has is taken you 4 years to come up with this plan?

    0/10 for effort, must try harder.

  • rate this
    +3

    Comment number 695.

    Jack Napier
    It was much more important to cut benefits from those who have chosen not to work (though they claim to have no idea how many there are - my MP says "some"), and make people pay more for not moving to smaller houses that don't exist, than to go after people who mess with money. 52% of tory funding comes from money men.

  • rate this
    0

    Comment number 694.

    665.therealist
    don't forget the Scotish Banks were amongst the worst culprites in all this

    Westminster did not have in place a “resolution mechanism” for dealing with failing banks. Now this is in place it should encourage Directors / shareholders / creditors / management an incentive to behave prudently. Before this was in place the above behaved recklessly knowing they would be bailed out

  • rate this
    +2

    Comment number 693.

    Six years on from the big banking cock up & the government still hasn't put in legislation to srop the whole thing happening again.

    It hardly seems to be priority for them.

  • rate this
    +1

    Comment number 692.

    685. michellegrand
    10 MINUTES AGO
    680.SJH
    Vince Cable and Ken Clarke both saw the banking problem coming, warned people, and were ignored.
    --
    How much dosh do you think has been made (I was going to say earned but I couldn't lie) from the banking crash?

 

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