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 Libor benchmark.
The party’s home-affairs spokeswoman, Yvette Cooper, told the party’s annual conference in Manchester, northern England, 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 said. “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.
“In the U.S. they have seen 800 prosecutions for serious fraud since last year,” Cooper said. “Here in the U.K., where the Serious Fraud Office budget has been cut by 25 percent, they have pursued only 20. If you don’t pay your TV license, you’ll end up in court. But defraud millions of pensioners or small businesses and you can get off scot-free.”
The Liberal Democrats, Prime Minister David Cameron’s coalition partners, attacked Labour, accusing it of double standards over its attitude to the finance industry during 13 years in power to 2010.
The Liberal Democrats issued a poster showing Labour leader Ed Miliband as a poodle on a leash held by a banker, with the slogan “Labour: 13 years as the bankers’ lapdog. Two years trying to hide it.”