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<p>The Government has taken a substantial number of measures to change the culture
in UK banking.</p><p> </p><p> </p><p> </p><p>This Government supported the work of
the Parliamentary Commission on Banking Standards which reported in June 2013 on professional
standards and culture of the UK banking sector. Legislation to give effect to its
recommendations on banking standards and individual accountability were included in
the Financial Services (Banking Reform) Act 2013. The Financial Conduct Authority,
the Prudential Regulation Authority and the Treasury worked through 2014 to prepare
secondary legislation, regulatory rules and other detailed implementing measures.</p><p>
</p><p>The Government expects to announce the final timetable for implementing these
reforms shortly.</p><p> </p><p> </p><p> </p><p>In the Financial Services Act 2012,
this Government introduced a new criminal offence to address the issue of the manipulation
of the LIBOR interest rate benchmark. In December 2014 the government announced that
this offence would be extended to cover a further seven financial benchmarks from,
subject to Parliamentary approval, 1 April 2015.</p><p> </p><p> </p><p> </p><p>We
also recognise that there is more to do if the banking industry and global financial
markets are to regain public trust. The Chancellor of the Exchequer therefore announced
in his Mansion House speech in June 2014 a Treasury, Bank of England and FCA review
of the operation of the foreign exchange, fixed income and commodity markets. The
Fair and Effective Markets Review will examine how trust and credibility in these
markets can be restored. The review will report in June 2015.</p><p> </p><p> </p><p>
</p><p>In November 2014 the Financial Conduct Authority (FCA), in co-ordination with
financial regulators in the US and Switzerland, announced the outcome of its investigations
into attempted manipulation of foreign exchange markets by 5 banks. It imposed penalties
on 5 banks totalling £1.11 billion. In addition the Director of the <a href="http://en.wikipedia.org/wiki/Serious_Fraud_Office"
target="_blank">Serious Fraud Office</a> opened a criminal investigation into allegations
of fraudulent conduct in the foreign exchange market in July 2014. The Government
does not comment on ongoing investigations, so as not to prejudice these inquiries.</p><p>
</p><p> </p><p> </p><p>Ensuring that firms incentivise employees to behave in the
right way is essential to restoring public trust in financial services. The Fair &
Effective Markets Review’s scope covers trading practices in markets, and drivers
of behaviour including incentives for individuals. In November 2014 the Chancellor
wrote to the Governor of the Bank of England to ask that the increasing levels of
fixed remuneration in the financial sector following the introduction of the ‘bonus
cap’ be considered as part of this work.</p><p> </p><p> </p><p> </p>
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