The British Bankers' Association (BAA), the organisation that sets the Libor interbank rate, has said it will support any plans to strip it of its responsibility for Libor, if required.

On Tuesday, the BBA said in a statement that it seeks to work with the Wheatley review team as it completes a consultation on the future of Libor. It added: 'If Mr Wheatley's recommendations include a change of responsibility for Libor, the BBA will support that'.

Martin Wheatley, appointed by the Treasury to review the way the current regime operates, is expected to publish a report into Libor reform this Friday. He has already branded the existing system 'no longer fit for purpose' and is expected to recommend radical changes to the way the rate is calculated.

The Libor system is currently overseen by the BBA but not formally regulated by the FSA or Bank of England. In an attempt to rebuild confidence in financial markets, the BBA may be replaced by a formal regulator that will oversee the rate that is used to set prices on a range of financial instruments, such as mortgages and interest rate contracts.

There has been strong criticism of the way BBA has run Libor, although it argued that it was not directly responsible for compiling the rate. While the BBA has published the rate since 1986, it has never been directly regulated, despite the special role it has as a key global benchmark used by banks to lend to companies and individuals.

This latest development follows a string of dramatic turns in the Libor scandal including the resignation of former CEO of Barclays, Bob Diamond, and a subsequent £290m fine for Barclays over the rigging of Libor.

The saga is set to continue as further investigations into how other major banks could have conspired to influence the level at which Libor are set to take place.

Lloyds Banking Group and Royal Bank of Scotland are among the banks currently being investigated.