Rigging bankers face jail, warns Mark Carney
Bank of England governor Carney tells bankers ‘the age of irresponsibility is over’
Blaming past failings inside the Bank of England, Mr Carney said its ultra-traditional governance rules had “weakened the social licence of markets”. Photograph: Leon Neal/AFP/Getty Images
In a Mansion House speech last night, Mr Carney promised a tough United States-style regime, telling bankers that “the age of irresponsibility is over”.
Currently, bankers can be sentenced to seven years in jail for rigging markets, or insider dealing, but prosecutions are few and sentences are light.
Blaming past failings inside the Bank of England, Mr Carney said its ultra-traditional governance rules had “weakened the social licence of markets”.
Ethical driftIn future, named individuals in banks will be held accountable for criminality on their watch, with sentences rising to match those that are possible for large-scale fraud.
Past mistakes by regulators and banking greed had led to “ethical drift”, which led in turn to a series of scandals over rigging of the figures for Libor and other trading markets.
In the last seven years, nearly £100 billion in fines have been imposed upon global banks for a series of offences, but only a tiny number of bankers have faced criminal prosecutions.
A new regulator, the market standards board, will set the rules for fixed income and currency and commodity, where tens of billions are currently traded daily with little, if any regulation.
Even tougher regulation will follow, warned the Canadian central banker, if banks fail to heed the new code: “Unethical behaviour went unchecked, proliferated and eventually became the norm,” he said.
Welcoming the tougher sanctions, chancellor of the exchequer, George Osborne said: “The public is right to ask why it is that after so many scandals, and such cost to the country, so few individuals have faced punishment in the courts.
“The governor and I agree: individuals who fraudulently manipulate financial markets and commit financial crime should be treated like the criminals they are – and they will be,” he went on.
Mr Osborne announced plans to pass laws to require British governments to run budget surpluses in good times – in a bid to eat into the UK’s £1.5 trillion debt, which has doubled over the last five years.He also said he would begin to start selling the state’s stake in Royal Bank of Scotland.