Serious Fraud Office investigators are in talks with the City watchdog over the Barclays rate-rigging scandal that has rocked the banking industry, the Chancellor has said.

George Osborne told MPs the affair was "a shocking indictment of the culture of banks like Barclays in the run-up to the financial crisis".

The Financial Services Authority (FSA), which along with US regulators landed Barclays with a £290 million fine for manipulating the rates at which banks lend to each other, was holding talks with the Serious Fraud Office (SFO), he said.

The Chancellor echoed comments from the Prime Minister that Barclays "had serious questions to answer" as pressure mounted on chief executive Bob Diamond to step down.

Barclays' shares closed 15.5% lower at 165.6p, wiping £3.2 billion from its value.

Mr Osborne said it was among several global banks also being investigated, adding: "It is clear that what happened at Barclays, and potentially other banks, was completely unacceptable, was systematic of a financial system that elevated greed above all other concerns, and brought our economy to its knees."

Turning to Mr Diamond, who waived his bonus for 2012 in light of the scandal, the Chancellor said: "As far as the chief executive of Barclays is concerned, he has some very serious questions to answer today. What did he know and when did he know it? Who in the Barclays' management was involved and who, therefore, should pay the price?"

The controversy, which covers a period between 2005 and 2009, could spread to other lenders, as HSBC, UBS and Citigroup are also being investigated. The Chancellor said he would look at strengthening the criminal sanctions available to the financial regulators and added the Financial Services Bill could be amended.

Addressing the scandal in a speech to the Unite union conference in Brighton, opposition leader Ed Miliband called for a criminal investigation. "This cannot be about a slap on the wrist, a forgoing of bonuses, a fine and that's the end of the matter," he said.

Speaking later from Brussels, Mr Cameron told the BBC he was "determined" that all lessons are learned from the scandal, adding: "People have to take responsibility for the actions and show how they are going to be accountable for those actions and that's very important that goes all the way to the top of that organisation."