UK chancellor George Osborne announces tougher finance rules

George Osborne, the UK’s Chancellor of the Exchequer and Second Lord of the Treasury, is set to announce a new set of measures to clamp down on bad behaviour in the finance sector.

The UK’s financial sector has suffered from a flurry of scandals in recent years, which have often left the public unaware of the amount of good practice that still goes on. In a bid to prevent problems such as the Libor-fixing fiasco from cropping up in future, George Osborne is due to announce a new set of measures to stamp out malpractice in the industry.

One of the most significant changes will be an extension of the new legislation that was put in place to regulate Libor rates.

It is now a criminal offence to manipulate the interest rate benchmark, and under the chancellor’s proposals there will be criminal sanctions for manipulating other benchmarks such as those for foreign exchange, fixed income and commodities markets.

Moves to increase the criminal regime for market abuse will see the UK choosing not to opt into EU regulations. The government says that is because British law will be at least as strong as the European rules.

In addition, professional standards will be further enforced by changes to the Senior Managers and Certification Regime, which will now cover all banks with a UK presence and not just UK institutions.

“Confidence and trust are critical to financial markets – and robust, reliable benchmarks are the bedrock of market integrity. I welcome this review, which will ensure that key markets operate with the highest standards of integrity,” says Martin Wheatley, chief executive of the Financial Conduct Authority (FCA).

The Treasury set out some of its plans as it launched a new review into the financial services industry. It will work alongside the Bank of England and FCA on the Fair and Effective Markets Review, which will focus on the fixed income, currency and commodity markets, which have come under the most scrutiny for bad practice of late.

The review is expected to last for a year, making recommendations on principles to govern the financial markets, enforcement measures, strengthening oversight and whether further changes need to be made to the existing regulatory framework.

Mark Carney, governor of the Bank of England, says the UK will be able to build “true markets” thanks to the review, which are “open and transparent, where access extends beyond a privileged few, and where all who wish to trade have common information and commonly accessible prices”.