Britain's financial regulator on Friday laid out a 10-point plan to overhaul the handling of a key global interest rate that has been the subject of a scandal involving major banks across multiple countries.

Barclays bank agreed in June to pay a $453 million US fine to U.S. and British agencies after admitting it had submitted false information for the London Interbank Offered Rate, or LIBOR, which is used to price trillions of dollars in financial contracts, including mortgages.

Other firms are being probed in the scandal, which has undermined public trust in banks and damaged the reputations of British financial regulators.

The new plan proposes that bankers convicted of manipulating the rate face criminal penalties and that a new agency take over management of LIBOR. It also calls for tougher controls on banks involved in the rate's calculation.

"Although the current system is broken, it is not beyond repair," said Martin Wheatley, managing director of the Financial Services Authority, the main regulator, as he announced recommendations from the review of LIBOR ordered by the British government.

The FSA said Friday that the rate-fixing scandal was an industry-wide problem which tore "the very fabric that our financial system is built on".

The British Bankers' Association, a trade group, sets the LIBOR every morning after about a dozen international banks submit estimates of what it costs them to borrow.

Regulators in the U.S., Britain, Switzerland and other countries allege some banks, including Barclays, purposefully submitted fake numbers to have the LIBOR set at a rate that better suited them.

Bankers' association 'clearly failed'

Wheatley recommended that the handling of LIBOR be stripped from the British Bankers' Association, which "clearly failed" in administering the rate He accused the BBA of being careless in policing LIBOR, putting too much trust in a system lacking "the right level of checks and balances."

Wheatley said he is setting up an independent panel to lead the appointment process for a new group to run Libor, inviting other groups to apply to take over the role and that he wants the new managing body to draw up a code of conduct and carry out regular audits.

The BBA said the review was an "essential step" toward reforming Libor and signaled it would accept Wheatley's recommendation to hand oversight to a new administrator. Wheatley also proposed that banks submitting rates be subject to formal approval.

More banks should be encouraged to submit rates to make the LIBOR benchmark more representative, while the publication of individual submissions should be held back for three months to help prevent manipulation, he said.

He proposed that the FSA continue to be the main regulator.

Britain's Treasury expressed support for the "comprehensive and practical recommendations" laid out in the review, while Bank of England governor Mervyn King called for a swift implementation of the proposals.

So far, Barclays is the only bank which has been identified as submitting false reports of the rates it expected to pay to borrow from other banks, although several other banks — including Citigroup Inc., Royal Bank of Scotland and JPMorgan Chase & Co. — are known to be under investigation.