British Prime Minister David Cameron has branded a rate fixing scandal which prompted Barclays CEO Bob Diamond to quit as "appalling" and "outrageous."
Cameron's comments came shortly before Diamond was to face a grilling by British lawmakers.
This comes a day after he resigned from the top job over revelations that Barclays traders tried to manipulate key interest rates.
The row also extends to international banks operating in London.
"This banking scandal is appalling," Cameron told lawmakers at his weekly question and answer session in parliament.
"It is outrageous, frankly, that homeowners may have paid higher mortgage rates and small businesses may have paid higher interest rates, because of spivvy and probably illegal activity," he said.
Cameron is backing a parliamentary investigation into the scandal, which has sparked a deepening political row over ethical standards in the City of London financial sector.
"People want to know that crime in our banks, crime in our financial services will be pursued and punished like crimes on our streets," Cameron said.
Lawmakers are to vote tomorrow on whether to back the opposition Labour party's calls for an independent, judge-led inquiry into the scandal, similar to the probe into phone-hacking at Rupert Murdoch's media empire.
But Cameron said he favoured a parliamentary inquiry over a judge-led investigation, which he argued would take much longer.
Diamond is one of three top Barclays employees who quit this week over the scandal, which centres on traders' attempted manipulation of Libor, the rate at which banks offer to lend money to each other.
Cameron joined a growing chorus of politicians calling for the executives who have resigned over the debacle not to receive generous severance packages. "I think it would be completely wrong if people who were leaving under these circumstances were given some vast payoff," he said.
Diamond facing tough questions at Treasury committee
Bob Diamond will face tough questions from British lawmakers later today, the day after he quit as Barclays chief executive and a bank rate-rigging scandal claimed a third top-level scalp.
Diamond, 60, stepped down from the top job yesterday over revelations that Barclays traders tried to manipulate inter-bank lending rates. Barclays chief operating officer Jerry del Missier also resigned hours later over the affair, which claimed the job of the bank's chairman Marcus Agius on Monday.
Diamond was facing questions today by parliament's Treasury Select Committee, particularly over a phone conversation he had with Paul Tucker, the deputy governor of the Bank of England, in 2008.
Lawmakers are likely to focus on whether or not the Bank of England was implicated in the manipulation of Libor - the rate at which banks offer to lend money to each other.
Barclays yesterday released Diamond's note to del Missier - then president of the firm's investment banking arm Barclays Capital - summarising his call with Tucker.
Barclays said that from this, "del Missier concluded that an instruction had been passed down from the Bank of England not to keep Libors so high and he therefore passed down a direction to that effect."
However, the bank added that: "Bob Diamond did not believe he received an instruction from Paul Tucker or that he gave an instruction to Jerry del Missier."
Agius told reporters yesterday that Missier had been "the most senior officer at Barclays who gave instructions to lower Libor rates and that obviously puts him in a very difficult position."
Diamond has pledged to cooperate with the parliamentary committee in a letter to the committee's chairman written before he resigned but said he would not be able to address some issues due to ongoing investigations.
Barclays was last week fined £290m sterling by British and US regulators for attempted rigging of the Libor and Euribor interest rates. Libor is a flagship London instrument used throughout the world, while Euribor is the euro zone equivalent.
The rates play a key role in global markets, affecting what banks, businesses and individuals pay to borrow money. Manipulating the rate could have given the impression that the bank was in a stronger position financially than it actually was.
Agius is staying on in his job to lead the search for Barclays' new chief executive, while Diamond and Missier have resigned with immediate effect.
Explaining his decision to quit after 18 months in the top post, Diamond said in a statement: "The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen."
Raising suspicions of possible wider rigging, it emerged at the weekend that Royal Bank of Scotland had sacked four traders over their alleged involvement in a similar affair.
Britain's Serious Fraud Office on Monday announced that it was considering whether to bring criminal prosecutions over the issue.