By Rey Fleming

It was at the end of June when I first wrote in this space about the Libor benchmark rate scandal in which Barclays Bank had played a major role. Since then the chairman and chief executive officer of Barclays have departed and we are all much wiser about how a London-based system used to calculate the interest rate for $360 trillion of financial instruments worldwide had been manipulated to benefit traders in individual banks.

Yesterday the UK Financial Services Authority (FSA) issued a report on the Libor affair and outlined plans to establish a new manipulation-proof system to replace it and to introduce measures that will make it a criminal offence to rig the Libor system as Barclays and other banks had done since 2007. The British Bankers' Association which had oversight of Libor operations has been told its services will no longer be required. Next year the Financial Services Authority will assume primary responsibility for regulating Libor and will be renamed the Financial Conduct Authority -- a shaming change indicating that the conduct of people in the City of London once assumed to be as good as their word cannot any longer be trusted without close supervision. It is a sad but necessary change following events which Martin Wheatley, chairman of the FSA, yesterday said had “Torn the very fabric that our financial system is built on.”