Governor Mark Carney has defended his handling of deputy Charlotte Hogg after she broke the Bank’s code of conduct by failing to disclose that her brother worked in a senior role at Barclays.
She was disciplined by having her salary rise blocked and her assignments reassigned but after attracting strong criticism from MPs for breaking the code – which she helped establish – she resigned.
Carney (pictured) said: “We do not run for our regulated entities a disproportionate ‘one strike and you’re out’ regime for an honest mistake. Neither explicitly nor implicitly.
“Proportionate means taking into account the severity of the incident, the track record of the individual and their firm, as well as the firm’s wider response.
“An honest mistake that is freely admitted for which a firm takes prompt remedial action is not a firing offence.”
He warned against senior managers being put under the same pressure who make mistakes, adding: “We must not let recent events inadvertently tighten perceived standards for the industry because that could have senior managers running scared, drive compliance underground and undermine our collective objectives.
“Another risk, flagged by some, is that it will also become harder to find candidates of sufficient calibre willing to take on senior roles.
“This is why last week I spoke with the CEOs or chairs of all of the major banks to reiterate our expectations as regulator.
“I’m glad I did because they were all concerned about precisely such unintended consequences.”
The Governor also said banks are struggling for legitimacy due to a range of scandals including mis-selling and manipulation
Only a fifth of the UK public think banks are well-run, he added, while global banks have paid out £257m in misconduct costs.
He said: “Over the past decade, banking has suffered twin crises of solvency and legitimacy.
“The first is being addressed by comprehensive reforms… this immense progress has been overshadowed by a crisis of legitimacy.
“A series of scandals ranging from mis-selling to manipulation have undermined trust in banking, the financial system, and, to some degree, markets themselves.”