Financial services regulator is investigating banks’ loan losses

News Corp Australia has announced it will launch a probe into financial services company Libor, following a string of losses.

The financial services regulator has said it will look into Libor rates and will make recommendations to regulators including the Australian Securities and Investments Commission (ASIC) and the Australian Financial Markets Authority (AFMA).

In a statement, the bank said it was “committed to ensuring that the financial services industry works for all customers, whether they are small or large, and is free from the damaging effects of predatory practices”.

“As we look at how Libor was set in the first place, we have determined that it needs to be reviewed to ensure that it remains safe for both small and large businesses to use,” it said.

It said the regulator would “ensure the financial system operates as it should, and that it is transparent, fair and effective”.

It will be investigating “the accuracy of the Libor rate setting methodology” and “the extent to which the process has been abused to benefit financial services providers and their affiliates”.

The bank said its review will look at “the role of banks in the wider economy, the effect of their financial activities on Australia and the broader economy”.

It said its probe would be “intensive and comprehensive”.

The regulator’s review will also look at the “nature and extent of any conflicts of interest that may have been expressed in Libor reporting” and whether “a conflict of interest exists between Libor and a financial institution”.

In an emailed statement, ASIC said it had already “commenced an investigation into allegations that Libor is subject to manipulation by a financial services firm”.

“This investigation will be completed in due course, and we will be seeking to provide ASIC with further information in the coming days,” ASIC said.

“We have been in regular contact with all the relevant regulators about their investigation of Libor.”

The ASIC said that, while the probe into Libour would be the first of its kind, “any similar investigations are likely to be ongoing in the future”.

The ASIC has been “looking into issues of bias in the Libour process and has made recommendations for how to improve the quality of reporting by financial institutions and how the industry should work together to address bias”, it said in a statement.

It added: “It is clear that there is an ongoing issue of significant concern to consumers and the wider Australian community about the impact of Libors on lending.”

The ASI also said that it would be reviewing Libor to “ensuring that it continues to be a reliable, fair, transparent and effective benchmark for lending”.

It added that “as the regulator, ASIC will continue to work closely with other regulators and regulators’ staff, and the industry, to ensure Libor remains as fair and transparent as possible”.

It also said it would look at a range of “relevant measures” including a “rigorous review of the methodology and quality of Libour reporting, including the quality and relevance of the data that has been collected and the information that has gone into its design”.

In its statement, News Corp said it wanted to “reiterate our commitment to the safety and security of our customers and the community”.

The news comes after the ABC revealed in February that News Corp was under investigation by the regulator for its role in the subprime mortgage market.

The ABC reported that the regulator was looking into whether News Corp had “negligently and recklessly” allowed subprime borrowers to borrow on their home mortgages without checking the quality or accuracy of their loans.

In its annual report, the ASIC said the financial institutions that are under scrutiny were “responsible for managing the lending environment” and that they “must ensure that they are following the rules and regulations in their own jurisdiction”.

The investigation into the banks was launched by the ASI in 2015, and it is a probe that has also been launched by ASIC.

The ASICS is also investigating the conduct of an alleged financial services fraudster who is being investigated by the Australian Federal Police for his alleged role in a $1 billion subprime loan fraud scheme in 2013.

The investigation is being led by the New South Wales Police Crime and Corruption Commission.

“There is a clear and present danger of serious harm to financial institutions from the behaviour of predatory lenders and the criminal acts they have committed,” ASIC commissioner Andrew Scipione said in an emailed response to questions about the investigation.

“While this investigation is not an inquiry into the conduct or business practices of financial institutions, I would like to reassure the public that ASIC’s investigation is taking place to identify and address any further wrongdoing in the financial industry and ensure the safety of our consumers.”

“We are confident that we have done our job in the past, and our investigation will continue,” Mr Scipion added.

“In the coming months, ASIC’s work will include a review of our existing investigations into other major financial institutions to ensure we continue to do all we can to bring the criminal activity that occurred in the late 1990s to an end.”

The regulator has been criticised