Carney: Slash bankers’ salaries for misconduct

The scandal-struck banking sector is going to have to do more to improve its image, Bank of England Governor Mark Carney has warned.

Repeated fines for serious misconduct including the Libor scandal and the Foreign Exchange (forex) rate rigging scandal have done little to enamour the public with an industry in which there appears to be little or no tangible accountability for wrongdoing.

New measures are needed, Carney said, to restore trust in the system.

His proposed measures include bankers losing more money from their salaries, in addition to forfeiting bonuses, should any misconduct be discovered.

The money may then go towards any fines the bank may incur through employees’ impropriety.

Speaking about the forex and Libor scandals, Carney said: “The repeated nature of these fines demonstrates that financial penalties [for the banks] alone are not sufficient to address the issues raised.

“Fundamental change is needed to institutional culture, to compensation arrangements and to markets.

“It is simply untenable now to argue that the problem is one of a few bad apples. The issue is with the barrels in which they are stored.”

Deflecting well-worn arguments that further regulation could affect banks’ ability to attract top talent, Carney added: “Already we can hear some of the runners, particularly those at the back, making world-weary arguments that more reform will hurt jobs and growth, and even that financial crises are just something that happens every five to seven years. If that were true, we are due for another crisis about now. Does anyone find that acceptable?”

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