Labour leader, Ed Miliband has called for a full public inquiry into the UK banking sector following the uncovering of two major scandals in the last week.
Barclays and other banks were found to have systematically manipulated the Libor inter-bank lending rate that ties interest rates to trillions of worldwide financial transactions including mortgage and loan rates that affect residential customers.
Additionally, the Financial Services Authority (FSA) has published details of what it called “serious failings” and a further mis-selling scandal involving the Royal Bank of Scotland (RBS) and other UK banks that mis-sold interest rate hedging products to small and medium-sized businesses and individuals.
Mr Miliband said that a tough new code of conduct must be introduced that banks should be required to sign up too. He also recommended that prison sentences should be introduced for some bankers who had abused the system.
Mr Miliband called for a 12-month inquiry that would be set up with cross-party support to “find out what is going on in the dark corners of the banks.”
He said in an interview with The Times: "We've got to have an open, independent inquiry with hearings to find out what is going on in the dark corners of the banks.
"Some of it clearly was illegal, but it goes well beyond that. There is a problem with how people operate. This isn't just about regulation, it's also about culture and ethics."
The governor of the Bank of England, Sir Mervyn King said that he did not think that a Leveson-style inquiry was required but that a “change of culture” was needed.
He said: "From excessive levels of compensation, to shoddy treatment of customers, to a deceitful manipulation of one of the most important interest rates and now news of yet another mis-selling scandal we can see we need a real change in the culture of the industry."
Governor King refused to publicly back Barclays chief, Bob Diamond and Mr Miliband said that Mr Diamond should resign.
The Prime Minister, David Cameron, said that Mr Diamond has “questions to answer”, but Mr Diamond has said that he will not resign and that the Libor manipulation was down to the actions of just “a few” employees.
Mr Diamond will appear in front of the Treasury Select Committee to answer questions about the allegations.
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