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BoE calls for accountability reforms


The governor of the Bank of England (BoE), Mark Carney, has claimed that senior mangers of banks and building societies will be held directly accountable for failures in their institutions.

From next year, individuals will be held accountable for their own conduct and firms will be required to take a greater responsibility for market practices, Mr Carney has said. As well as this, new regulations to close gaps in regulatory coverage and broaden the way senior mangers are held to account.

Carney also said that criminal sanctions should be updated, market abuse rules extended and maximum prison terms lengthened.

In his speech, Carney highlighted how the changes will be made to help introduce standards of market practice and will be widely followed and understood in the business. He said:
"These sanctions, while necessary, aren’t the solution, not least since the $150 billion of fines levied on global banks translates into more than $3 trillion of reduced lending capacity to the real economy.
If firms and their staff fail to take this opportunity [to improve their practices], more restrictive regulation is inevitable.

"To give these measures teeth, key elements of the Senior Managers Regime should be extended to all firms active in wholesale FICC markets, including dealers and asset managers. That means all senior managers would have clearly defined responsibilities and would be answerable for training, certifying and monitoring the material risk takers they supervise. The FCA should oversee compliance, redeploying resources to focus on Senior Persons. In turn, these individuals would be on the hook for promoting compliance within their organisations. Incentives will be aligned."

Chancellor George Osborne has endorsed these changes, claiming:
"Our financial services industry in Britain has, in recent years, been seen as part of the problem – now it must become part of the solution."

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