The government have ordered a review, lead by an independent expert, into the interbank lending rate. The review is expected to begin next week and continue over the summer.

The review could see responsibility for regulation being taken out of the hands of the British Bankers Association, and falling to the Bank of England or the city regulator.

The news followed a call by Ed Miliband for a full scale public inquiry into the banks after two major scandals erupted in the sector this week.

In an interview with the Times, he said there should be a new banking code of conduct, where bankers are "struck off if they do the wrong thing".

He said:

"There has been no systematic look at the customs and practices of the banking industry. We've got to have an open, independent inquiry with hearings to find out what's going on in the dark corners of the banks.

"Some of it was clearly illegal, but it goes well beyond that. There is a problem with how these people operate. It wasn't just a few rogue traders out of control and no-one knew what they were doing."

Miliband's sentiments echo those of Ed Balls, who also called for an investigation, telling the BBC that the government "can't just brush this under the carpet".

However, David Cameron rejected the calls for a full-scale inquiry. Speaking from the EU summit in Brussels, the Prime Minister said the government was already taking action to solve the industry's problems.

"The most important thing people want to see is a really concrete set of actions that will help change the culture.

"You don't change culture by changing laws and changing regulators alone, but I think if we can do this in a very clear and considered way then we have a chance of getting this right."

He supported the comments of Bank of England Governor Mervyn King, who said that a wider inquiry was unneccesary, although Britain's banks need a "real change in culture".

"From excessive levels of compensation, to shoddy treatment of customers, to a deceitful manipulation of one of the most important interest rate and now news of yet another mis-selling scandal we can see we need a real change in the culture of the industry."