THE Financial Services Authority (FSA) has admitted that it was too slow to spot that banks were tampering with Libor – but stopped short of branding its mistake as a “major regulatory failure”.
Following an internal inquiry, the watchdog yesterday published a 103-page report into its own actions that found the FSA had not failed in the same way as it did during the collapse of Northern Rock and Royal Bank of Scotland.
Instead, the £600,000-probe said the body should have been quicker to investigate suggestions of “low-balling” – when banks lied about how low they could borrow money from one another – but that it could not have known traders were conspiring to fix Libor for profit.
Auditors searched 17 million records, reviewed 97,000 documents and interviewed 20 staff and found 26 direct references to low-balling.
Lord Adair Turner, the watchdog’s chief executive, said: “The FSA did not respond rapidly to clues that low-balling might be occurring. There are important lessons to be learnt about effective handling of information.”
His comments come just weeks before the FSA is disbanded, with the Bank of England taking over the supervision of high street lenders, while the new Financial Conduct Authority focuses on enforcement.
A spokesman for the British Bankers’ Association (BBA), which represents the high street lenders, said: “The absolute priority now for everyone is to ensure the provision of a reliable benchmark that has the confidence and support of all users.”