BANKERS found guilty of rigging the Libor rate should face criminal sanctions, a Government-ordered report into the scandal will say today.

The sector should also be stripped of responsibility for Libor – the London Interbank Offered Rate – and control of it should be handed over to the City regulator, the Financial Services Authority (FSA), will add.

The results of an investigation by the Financial Conduct Authority (FCA) come after the scandal which erupted during the sum-mer. It cost Barclays its chairman Marcus Agius and chief executive Bob Diamond after the bank was fined £290 million for its involvement in the scandal.

A number of other major UK banks are still under investigation by the authorities amid Libor fixing allegations, including the part-taxpayer owned Royal Bank of Scotland (RBS).

During the scandal bankers were found to have manipulated the rate, which governs how much banks charge to lend to each other.

The rate is crucial as it can often have a knock-on effect on charges to customers. It is also seen a crucial indicator of the health of a bank.

Investigators found one possible motive for the manipulation was that at the height of the banking crisis in 2008 no bank wanted to be seen to have high Libor rates.

However, the Treasury and the Bank of England have denied putting pressure on UK banks to get their rates down.

Today's report, ordered by the Coalition Government in the wake of the Barclays fine, pointed out that Libor rates affect thousands of mortgages and business loans around the globe.

Martin Wheatley, the head of the FCA, has rejected calls for the rate to be scrapped entirely. He will say in a speech to launch the report that Libor can be saved, but only with a comprehensive reform package.

With no-one yet jailed for their part in the scandal, he will recommend the FSA is given powers to prosecute those found to have manipulated the rate.

From now on, Libor submissions should be audited and backed up with "relevant trade data", he will also warn.

The British Bankers' Association should also be removed from its role sponsoring the process, he will add.

One of the reasons the scandal was allowed to develop was there was too little oversight of banks' submissions to accurately reflect the rate at which they were borrowing money from each other, he will say.

He will also call for a new system of accreditation for bankers and their managers involved in setting the Libor rate, and state that unless they are approved by the FSA they should not be allowed to take up such roles.

The measure should also apply to other related rates, not just Libor, he will add, as part of a 10-point plan to fix the process.

In the speech, Mr Wheatley will warn that observers are right to dub Libor "the most important figure in world finance", but say the system is broken and needs a complete overhaul.

While he will criticise those involved in manipulation he will also warn the problem was not a "few rogue individuals - but systemic".

"Confidence and trust" are critical to financial markets and those qualities need to be restored to Libor, he will say.

RBS has confirmed it is one of the banks currently being investigated over Libor.