The British Bankers' Association approved the handover of the governance and oversight of setting some of the world's most important interbank lending rates after the UK regulator stripped it of the responsibility last year for its failure to detect widespread market abuse.

Britain's Financial Reporting Council, the independent corporate governance regulator led by Sarah Hogg, will select a new operator by open tender.

In an emailed statement to IBTimes UK, the BBA confirmed that members gave formal approval for the transfer of BBA Libor to a new operator, which will be selected by the Hogg Committee

"The absolute priority is to ensure the provision of a reliable benchmark which has the confidence and support of all users, contributors and global regulators," says the statement.

In September last year, the Financial Services Authority (FSA) slammed the BBA for its failure to detect manipulation in the Libor setting process, which is an interest rate that is used to price trillions of dollars of financial products from mortgages to derivatives contracts.

Martin Wheatley, managing director of the FSA and incoming CEO designate of the Financial Conduct Authority attacked the "careless" way the rate setting process was overseen by the BBA and ceremoniously announced that it would be stripped of any further involvement.

"Governance of Libor has completely failed, resulting in the sort of shameful behaviour that we have seen. This problem has been exacerbated by a lack of regulation and a comprehensive mechanism to punish those who manipulate the system," said Wheatley in a speech.

"We can't allow the unfettered attitude that banks enjoyed previously. Much greater rigour and transparency must be introduced to the process of submission," he added.

However, Thomson Reuters still has a contract to calculate and distribute Libor rates for the BBA.

After Barclays became the first bank to settle with US and UK authorities in June last year for £290m (€335m /$443m) for manipulating Libor and Euribor, a flurry of regulators across the world launched their own investigations into dozens of other banks.

In December last year, UBS paid a $1.5bn fine to authorities in the UK, the US and Switzerland and pleaded guilty to one count of wire fraud with the US Justice Department in relation to rate manipulation in the market for yen Libor.

Following suit, RBS settled with US and UK authorities for a £390m fine and pleaded guilty for criminal charges from its Japanese subsidiary, in February this year.