FSA admits Libor failings after internal probe

THE CITY watchdog today admitted it should have been better at spotting false Libor submissions, although it didn’t admit major regulatory failure.

Publishing its internal audit report on the interest rate, the Financial Services Authority (FSA) said today that “all levels of management” were aware of “severe dislocation” in the Libor market from the summer of 2007 to early 2009.

The report, which searched 17m records and reviewed 97,000 documents, found a “number of instances where information available provided some indication that lowballing might be occurring”.

Lowballing is the practice of making low Libor submissions as to avoid attention.

FSA chairman Adair Turner admitted that the watchdog “did not respond rapidly” to clues that lowballing might be happening, adding that the FSA had no formal regulatory responsibility for the submission process.

RBS, Barclays and UBS have been fined for rigging the benchmark, and others are expected to settle charges soon.