South West IoD chairman calls for Libor reform to restore trust

A Devon business leader has called for "total reform" to restore trust in banks following the Libor-rigging scandal.

It comes after Royal Bank of Scotland was fined £390m by US and UK regulators for its role in manipulating the rate used to set prices on £300tn of financial contracts around the world, from mortgages to business loans.

Richard Ayre, chairman of the Institute of Directors in the South West, said: "The fines are an appropriate penalty for outrageous behaviour on the part of some RBS employees.

"It's vitally important that customers can rely on the integrity of the financial products they buy, and that these cannot be manipulated by a small number of individuals intent on playing the system for gain.

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"These revelations have done much to damage the relationship of trust between British banks and their customers.

"Rebuilding that trust will require total reform of the way the Libor rate is regulated.

"We urge the Government to implement the recommendations of the Wheatley Review quickly, so that the rate is based on real market data and scrutinised by an independent administrator.

"We support the Government's call to RBS for the fines to be drawn from the bankers' bonus pool. It would be unacceptable for customers or shareholders – that is, the taxpayer - of the bank to pay for its failure to prevent wrong-doing by staff."