In the wake of the recent LIBOR scandal, which has already seen Barclays fined £290m by US and UK regulators for manipulating the rate, the regulator will today set out a package of proposals designed to restore trust, the Financial Times reports.

One of these will be to scrap the current system, replacing it with a borrowing rate based on actual trades, which could be overseen by a new independent body instead of the British Bankers’ Association.

Meanwhile, it will also consider introducing criminal sanctions for LIBOR manipulation, although it will makes clear this would be difficult to do.

In a speech today, Martin Wheatley (pictured), who heads conduct regulation at the FSA, will say: “The attempted manipulation of LIBOR and its European equivalent EURIBOR have cast a shadow over the industry at large and the construction and governance of the benchmark themselves.

“It is clear that regardless of the outcome of ongoing international investigations, trust in a vital part of the financial system has been badly damaged and timely action is needed to restore it.”

According to the Telegraph, at least 15 institutions are currently being investigated for LIBOR manipulation and could receive significant fines.

Today’s FSA discussion paper will be the first step of the independent review ordered by Chancellor George Osborne following the scandal.