Former CBI Chief To Aid Osborne Markets Probe

By Mark Kleinman, City Editor

A trio of heavyweight figures including a former head of the CBI will this week be appointed to scrutinise a Government-led probe into financial markets launched in the wake of a string of major trading scandals.

Sky News can reveal that Sir Richard Lambert, who ran Britain's biggest employers' group until 2011, is to be an independent member of the Fair and Effective Markets Review, which was disclosed by George Osborne, the Chancellor, in June.

Sir Richard will be one of three independent members of a practitioners' panel to be chaired by Elizabeth Corley, chief executive of Allianz Global Investors, one of the world's biggest fund managers.

The other independent members, who will examine the panel's work, will be Gay Huey Evans, a former Barclays executive and one-time chairman of the International Swaps and Derivatives Association; and Jonathan Moulds, who previously ran the European operations of Bank of America Merrill Lynch.

The Bank of England is expected to announce their involvement in the next few days, according to a person close to the situation.

Sir Richard's involvement comes just weeks after he recommended the creation of a new body to improve standards in the UK banking industry in an attempt to restore trust in it.

He and the other independent members will oversee the work of a group of serving City executives whose input is seen by the Treasury as crucial to restoring the international reputation of London's financial markets.

Mark Carney and George Osborne at the Mansion House in June

A number of sub-groups will be formed to examine different areas of financial sector activity, with the international competitiveness of the UK likely to be an important preoccupation for those involved.

Major banking groups have been hit by massive fines during the last two years, dealing a blow to the industry's efforts to rehabilitate its image in the aftermath of the global financial crisis.

Lloyds Banking Group, which is part-owned by UK taxpayers, is expected to announce on Monday that it is to pay more than £200m for its role in the Libor rate-rigging affair.

Banks and other financial institutions have also faced penalties for misconduct in setting benchmark prices for commodities and product mis-selling, while a major inquiry into fraud in foreign exchange markets is expected to result in huge fines later this year.

Among the objectives of the new investigation will be to inform the broader international debate about trading practices.

The Chancellor is determined to be viewed as a hardliner on City miscreants, and has already said that he wants to make the manipulation of financial benchmarks a criminal offence.

In his Mansion House speech in June, Mr Osborne said the Fair and Effective Markets Review would form an important element of moves to improve conduct in banking.

"The integrity of the City matters to the economy of Britain. Markets here set the interest rates for people's mortgages, the exchange rates for our exports and holidays, and the commodity prices for the goods we buy.

"I am going to deal with abuses, tackle the unacceptable behaviour of the few and ensure that markets are fair for the many who depend on them."

Mark Carney, the Governor of the Bank of England, said the probe would help the City to "build true markets...that 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".

The review will also be jointly led by the Financial Conduct Authority, whose chief executive, Martin Wheatley, said: "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."

The Treasury and Bank of England declined to comment on the names of those involved in the review.

None of the independent members of the practitioners' panel could be reached for comment.

The review is expected to report back by the end of summer next year.

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