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Carney seeks tougher sentences for 'irresponsible' traders Carney seeks tougher sentences for 'irresponsible' traders
(35 minutes later)
The governor of the Bank of England will launch a scathing attack on ethical standards in the City. Bank of England governor Mark Carney will call for longer prison sentences for bankers who break the law in an attack on ethics in the City later.
He will say that individuals acted with a "culture of impunity". In his Mansion House speech Mr Carney will say individuals acted with a "culture of impunity".
He will also say that markets responsible for trillions of pounds of global trade were stained by excess, collusion and abuse. But he will warn: "The age of irresponsibility is over."
In his Mansion House speech tonight, Mark Carney will say there should be new criminal sanctions to punish traders. Meanwhile, Chancellor George Osborne will say he plans to bind future governments to maintaining a budget surplus when the economy is growing.
Prison sentences should be increased, he will say. Mr Osborne will give the Mansion House audience more details of the proposal he first announced in January.
He will add that that following billions of pounds of fines for banks involved in the manipulation of markets, public trust had been eroded and that "ethical drift" had taken hold. Mr Carney will say markets responsible for trillions of pounds of global trade were stained by excess, collusion and abuse and "ethical drift" had taken hold.
"Criminal sanctions should be updated, with market abuse rules similarly extended and maximum prison terms lengthened," he will add.
'Markets can go wrong''Markets can go wrong'
He will also admit that the Bank of England under his predecessor Lord King failed in the run up to the financial crisis because of its arcane and ambiguous rules and its inability to identify risks in the banking system. It failed to effectively control markets where abuse was rife. He will say the Bank of England under his predecessor Lord King failed in the run-up to the financial crisis because of its arcane and ambiguous rules and its inability to identify risks in the banking system. It failed to effectively control markets where abuse was rife.
"Though markets can be powerful drivers of prosperity, markets can go wrong," Mr Carney said. "Though markets can be powerful drivers of prosperity, markets can go wrong," according to Mr Carney.
"Left unattended, they are prone to instability, excess and abuse."Left unattended, they are prone to instability, excess and abuse.
"Personal accountability was lacking, with a culture of impunity developing."Personal accountability was lacking, with a culture of impunity developing.
"All these factors contributed to an ethical drift. Unethical behaviour went unchecked, proliferated and eventually became the norm.""All these factors contributed to an ethical drift. Unethical behaviour went unchecked, proliferated and eventually became the norm."
PunishmentPunishment
The Chancellor, who is also speaking at the Mansion House tonight, will say: "The public rightly asks why is it after so many scandals so few individuals have faced punishment in the courts. Mr Osborne, who is also speaking at the Mansion House, will say: "The public rightly asks, why is it after so many scandals so few individuals have faced punishment in the courts?
"Individuals who fraudulently manipulate markets and commit financial crime should be treated like the criminals they are - and they will be.""Individuals who fraudulently manipulate markets and commit financial crime should be treated like the criminals they are - and they will be."
The Chancellor and the Governor speak alongside the publication of the Fair and Effective Markets Review, a report by the Bank, the Treasury and the Financial Conduct Authority on strengthening controls in financial markets. The chancellor and the governor will speak as the Fair and Effective Markets Review is published - a report by the Bank, the Treasury and the Financial Conduct Authority on strengthening controls in financial markets.
The report recommends a crackdown on rogue traders and a new Market Standards Board that would bring the "age of irresponsibility" to an end.The report recommends a crackdown on rogue traders and a new Market Standards Board that would bring the "age of irresponsibility" to an end.
The review says that criminal sanctions for market abuse should be extended to traders in markets such as foreign exchange, one of the markets hit hardest by manipulation by banks.The review says that criminal sanctions for market abuse should be extended to traders in markets such as foreign exchange, one of the markets hit hardest by manipulation by banks.
'Updated sanctions''Updated sanctions'
It also says that maximum sentences for wrongdoing should be lengthened from seven years to 10.It also says that maximum sentences for wrongdoing should be lengthened from seven years to 10.
The report argues that the Senior Managers' Regime of controls already agreed for banks should be extended to more people in financial services including traders and brokers.The report argues that the Senior Managers' Regime of controls already agreed for banks should be extended to more people in financial services including traders and brokers.
If agreed, that would mean that tens of thousands of people in financial services would be covered by the regulations which can punish wrongdoing with fines.If agreed, that would mean that tens of thousands of people in financial services would be covered by the regulations which can punish wrongdoing with fines.
The Bank said that it would immediately agree to be covered by the Regime, including the Governor himself.The Bank said that it would immediately agree to be covered by the Regime, including the Governor himself.
"The age of irresponsibility is over," Mr Carney will say. "Criminal sanctions should be updated, with market abuse rules similarly extended and maximum prison terms lengthened."
'Arcane governance''Arcane governance'
Mr Carney reserved some of his harshest criticisms for the Bank itself and how it operated ahead of the financial crisis of 2007 and 2008. Mr Carney has reserved some of his harshest criticisms for the Bank itself and how it operated ahead of the financial crisis of 2007 and 2008.
"In the run up to the crisis, the Bank's contribution to the effectiveness of markets fell short," the Governor will say."In the run up to the crisis, the Bank's contribution to the effectiveness of markets fell short," the Governor will say.
"Once under pressure, the Bank could not support the banking system."Once under pressure, the Bank could not support the banking system.
"The Bank neither identified the scale of risks in the system nor spotted gaps in the regulatory architecture."The Bank neither identified the scale of risks in the system nor spotted gaps in the regulatory architecture.
"[And] the Bank's arcane governance blurred the Bank's accountability and, by extension, weakened the social licence of markets.""[And] the Bank's arcane governance blurred the Bank's accountability and, by extension, weakened the social licence of markets."
The Bank's governance had now been reformed and that more would be done to strengthen the way it operated, according to Mr Carney.The Bank's governance had now been reformed and that more would be done to strengthen the way it operated, according to Mr Carney.