Osborne's Market Clean-Up: Too Little Too Late?

Another year, another probe into the misbehaviour of City bankers.

Thursday's announcement by George Osborne, the Chancellor, of a review called "Fair and Effective Markets" marks the fourth significant inquiry into the banking sector since the Coalition Government was formed in 2010.

The first three paved the way for profound reforms to the structure of the UK banking industry, and - to a lesser degree - of Royal Bank of Scotland, the state-backed lender.

Mr Osborne's latest review has less to do with structure and more to do with standards.

In the wake of the Libor-rigging inquiry, which has seen a handful of banks fined with more to come, the Chancellor believes there is further political capital to be generated from trying to stamp out errant behaviour.

His crosshairs are focused on the foreign exchange and commodity markets, where arcane price-setting mechanisms based on cosy huddles of bankers predominate.

The head of the City watchdog has already said that forex abuse may have been committed on a grander scale than efforts to manipulate Libor.

Under plans to be announced by the Treasury, legislation to regulate Libor will be extended to other financial benchmarks, with criminal sanctions among possible punishments.

The City's senior managers regime will be extended beyond UK-headquartered lenders to cover all banks with a British presence, while the Chancellor will create another dividing line with Brussels by not opting into EU rules covering criminal sanctions for market abuse.

The Treasury wants the new review to be complete within 12 months.

"The integrity of the City matters to the economy of Britain," Mr Osborne is expected to say in his annual Mansion House speech.

"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."

The Chancellor will, nevertheless, face the charge that he is closing the stable door long after the horse's departure.

Evidence of misconduct has, after all, been apparent since the financial crisis, with little concerted effort to tackle it until now.

Cathy Jamieson MP, Labour's Shadow Financial Secretary to the Treasury, said: "This review is too little, too late.

"We pressed Ministers to regulate commodities markets and the full array of financial benchmarks back in 2012, but the Chancellor failed to act."

Potentially more troubling for the Chancellor is that he will require widespread international backing to impose an effective clampdown on trading practices.

He may find that without it, his latest attempt to regulate the banking sector looks like little more than tinkering around the edges.