Does Libor come across to you as one of those
financial jargon that is difficult to comprehend? In simple terms it is the
interest or better still rate banks lend or borrow to each other on a short
term basis and it is been calculated daily by financial data firm. They can be
used to ascertain the condition of a country's financial system as well as the
indication of a banks strength. These rates eventually affects you through the
interest these banks charge on the credit card you have with them, interest you
pay on your mortgages or the cost of borrowing from a bank as an entrepreneur.
FSA is the body that is tasked primarily with
the responsibility to regulate the financial services industry in the United kingdom.
Two of Its statutory responsibilities are to reduce financial crime and
consumer protection but looking at the London Inter Bank Offered Rate Libor
scandal, it looks like they are not alive to their responsibilities when needed.
It is appalling to know that it took American
regulators (Federal Reserve Bank New York) to do the work of FSA, by identifying
this scandal almost 5 years ago and informed FSA but the almighty regulator
(FSA) did relatively nothing until it became widespread. It also took another
American regulator the Commodity Futures Trading Commission (CFTC) to impose
the first fine on Barclays before FSA woke up from its slumber.
The question that comes to mind is why the FSA
did not perform its statutory responsibilities to the public after red flag
been raised about improper conduct by the American regulator. Well the hope of
the public is on the breakdown of FSA into 2 new regulators with definite responsibilities
and powers to specifically regulate and supervise financial services industry
in the United Kingdom.
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