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Miliband urges inquiry into banking
Ed Miliband has called for a full-scale public inquiry into banking culture and practices after the City was rocked by two major scandals in the space of a week.
The Labour leader said the industry was plagued by an "institutional corruption" that could only be eradicated by introducing a tough new code of conduct and jail sentences for immoral bankers who abuse the system.
His comments were echoed by Bank of England Governor Sir Mervyn King who demanded a "real change in culture" as Britain's lenders were left reeling following a week blighted by controversy.
Mr Miliband pushed for a 12-month probe to "find out what is going on in the dark corners of the banks" after the Financial Services Authority (FSA) uncovered "serious failings" in the sale of complex financial products to small businesses, just days after the rate-rigging affair emerged at Barclays.
Taxpayer-backed Royal Bank of Scotland also confirmed it was being investigated for manipulating the rates at which banks lend to each other, known as Libor.
In an interview with The Times, Mr Miliband said: "There hasn't been a proper reckoning for what happened in the banking crisis. The bankers told us - it's all fine, we've cleaned everything up. But I'm afraid that doesn't hold water anymore."
Calling for a systemic look at the customs and practices of the industry, he added: "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."
Mr Miliband said the inquiry - set up with cross-party support - would be asked to draw up a bankers' code of conduct going beyond the "narrow" professional standards enforced by the Financial Services Authority (FSA).
Calling for the worst offenders to receive prison sentences, he added: "It should be about probity, honesty, integrity. Bankers should be struck off if they do the wrong thing...this is not a victimless crime."
Sir Mervyn said he believed a Leveson-style inquiry was not needed, but slammed conduct in the industry. 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."