(Repeats to additional Reuters instrument code)
* Lawmakers to decide on hearings next week -sources
* Committee members express anger over forex scandal
* BoE deputy governor to give evidence next week
By Kirstin Ridley and Matt Scuffham
LONDON, Nov 14 (Reuters) - British bank executives andregulators could be in line for public grillings following thisweek's landmark international settlement over allegations ofmanipulation and collusion in the $5.3 trillion-per-day foreignexchange market.
British regulators led a global investigation afterwhistleblowers raised concerns about misconduct in the forexmarket, resulting in six of the world's largest banks beingfined a total of $4.3 billion.
The UK set its fines at record levels, reflecting risingpolitical and public demands that bankers, cast since thefinancial crisis of 2007 to 2009 as villains who reaped rewardsas the world economy crumbled, are held accountable formisconduct.
But questions have been asked about how the UK's FinancialConduct Authority (FCA) ran the inquiry and what level ofpenalty, if any, can change the culture in financial markets.
Britain's Treasury Select Committee (TSC), a cross-partygroup of lawmakers, will decide next week whether to schedulehearings on the forex scandal, political sources said.
Some regulators and bankers admit they view much of theirwork through the prism of how they would justify decisions toTSC Chairman Andrew Tyrie, a steely lawmaker whose oftensardonic quizzings are broadcast on television.
"Whatever we do we measure against how it will look sittingin front of the Treasury Select Committee," one senior banker,who asked not to be named, recently told Reuters.
The TSC could use next Wednesday's hearing into a Bank ofEngland-led "Fair and Effective Markets" review, aimed atraising standards of conduct in wholesale financial markets, asa precursor to further hearings on the forex market.
Minouche Shafik, deputy governor of the Bank of England(BoE), is due to give evidence in the first session. Herevidence will be closely watched after the BoE on Wednesdayfired its chief foreign exchange dealer after an inquirycriticised his handling of suspicious market practices.
Tyrie has already voiced outrage at the latest scandal,saying some banks appeared too big to manage and suggestingtraders in a position to harm their employer, clients or marketsshould have their remuneration deferred for long periods and, ifcaught behaving badly, should risk having their licences topractice withdrawn.
HEADS SHOULD ROLL
Other TSC members have called for fines to be paid frombonus pools, rather than profits, and for heads to roll.
"If I was the banking minister, I would want to know who isgoing to be resigning," said John Mann, a TSC member. "Headsshould roll at the very top."
Two of the six banks fined were British, HSBC andRoyal Bank of Scotland. RBS has said it is reviewing theconduct of over 50 current and former staff, and dozens ofsupervisors, and had started a disciplinary process against sixpeople. Barclays is still in talks with authoritiesover a settlement.
Two of the main criticisms levelled at the FCA during itsforex investigation focus on concerns that increasingly punitivefines have done little to change bank behaviour and that theregulator effectively privatised much of its inquiry.
Regulators argue that slapping penalties on companies andsecuring deferred prosecution agreements, or non-prosecutionagreements, help change the culture of an organisation and, inan ideal world, prevent future crimes.
But large penalties can harm investors and employees,lengthy investigations demand experience and resources and some critics question why companies should be punished for crimescommitted by unprosecuted individuals.
The 13-month FCA investigation involved over 70 enforcementstaff and unprecedented cooperation with other regulators.
But it also relied on banks trawling through chatrooms andemails and interviewing staff - and passing evidence back in astrategy that some say allowed the industry to police itself.
Some lawyers argue this allowed the FCA to avoid using itspowers to compel individuals to come for interview and gatherevidence inadmissible in parallel U.S. proceedings. Under theFifth Amendment of the U.S. Constitution, people have a rightnot to answer questions that might lead to self-incrimination.
"This is just getting information through the back door,"said one lawyer familiar with the investigation. "You could sayit's outrageous, as it's essentially the UK subverting its owninvestigation process, privileges and protections for the U.S." (Additional reporting by Jamie McGeever; Writing by KirstinRidley; Editing by David Holmes)