Britain's financial watchdog said it should have been better at spotting how banks were rigging Libor benchmark interest rates although it stopped short of admitting to major regulatory failure.
After pressure from UK lawmakers into a scandal that has seen top bankers depart and banks fined billions of pounds, the FSA published an internal report on Tuesday into when it first knew about the manipulation of the London Interbank Offered Rate (Libor).
Regulators around the world are still probing banks, traders and brokers who help set a rate which is used to price trillions of dollars of products from credit cards to home loans, amid allegations rates were gamed for profit or lowballed.
FSA Chairman Adair Turner said that at the time the watchdog had no direct oversight of Libor, and therefore it "did not respond rapidly to clues that lowballing might be occuring".
"The report also reveals that while some information was available relating to lowballing, there is, for the period covered, no evidence of any information, direct or indirect, available to the FSA which indicated that traders were manipulating Libor for profit," Turner said.
The FSA conceded it was too narrowly focused in its handling of Libor-related information, should have considered that it was likely Libor was being lowballed - give cumulative information - and should have better managed the information it did receive.
Two UK banks, RBS, Barclays, and Swiss UBS have been fined for rigging Libor and other benchmark rates, with others expected to settle similar charges soon.
The benchmark is compiled from banks submitting quotes for interest rates at which they say they could borrow.
The banks were fined for manipulating Libor to make money on their derivatives contracts, or for low-balling Libor submissions to give an appearance they were having no difficulty borrowing money during the 2008 markets meltdown.
The FSA probe covered the period between January 2007 and May 2009 and searched 17 million records, reviewed 97,000 documents and interviewed 20 FSA staff or former staff.
(Reporting by Huw Jones, editing by Kirstin Ridley)