Carney In Frame To Aid Bank Standards Push
The Governor of the Bank of England is expected to be asked to play a key role in the creation of a professional standards body aimed at rebuilding the reputation of Britain's banking sector.
Sky News understands that Sir Richard Lambert, the former Financial Times editor who has been charged with overseeing the new institution, wants Mark Carney to assist with selecting its inaugural chairman.
It is unclear whether Mr Carney has been formally approached yet but his involvement, or that of one of the Bank's deputy governors, would augment the credibility of the new organisation.
According to a note of a recent meeting between Sir Richard and senior bankers, a copy of which has been seen by Sky News, the plan would be for the chairman to "be appointed by a small group (4) of public figures. The Board would include bankers but they would be in a minority."
Insiders said the Bank Governor was likely to be among the public figures asked to participate in that process.
At the World Economic Forum in Davos last month, the Governor made his most outspoken remarks since taking the role about the need for banks to repair their reputations.
"While regulators will fix the mechanics of benchmarks in markets ranging from Libor to FX (foreign exchange), only private individuals and institutions can reform the behaviour that has made such changes necessary," he said at a meeting in the Swiss resort.
Sir Richard is to publish a consultation paper setting out further details of his proposals for the professional standards body in the coming days.
Contrary to earlier indications, he is understood to have told industry figures that "the launch phase would focus on getting the large banks (in terms of employment in the UK) involved but the aspiration would be for individual bankers to become members too".
Sir Richard also discussed issues including the need for banks to overhaul internal audit and compliance functions.
"Whistleblowing isn't the whole solution; [the] industry needs to identify why problems were not escalated to management," the account of the meeting said.
However, it added that any new rules resulting from the new body should "ensure the smooth movement of global talent is taken into account...to ensure they don't act as barriers to trade or entry".
Impetus for reform was provided by the Parliamentary Commission on Banking Standards (PCBS), which said last year that it would demonstrate that "a commitment to high standards is expected throughout banking and that individuals are expected to abide by higher standards than those that can be enforced through regulation alone".
The Commission was established in the wake of Barclays' fine for rigging the Libor benchmark rate in the summer of 2012.
Since then, the Co-operative Bank has seen its reputation tainted by revelations about its former chairman, Paul Flowers.
Regulators have also opened an inquiry into potential manipulation of foreign exchange markets, while British lenders including the taxpayer-backed Royal Bank of Scotland have set aside billions of pounds more for product mis-selling compensation.
The PCBS, which was chaired by the Conservative MP Andrew Tyrie, insisted that any new body "must never allow itself to become a cosy sinecure for retired bank chairmen and City grandees. Just as importantly, it must eschew from the outset and by dint of its constitution any role in advocacy for the interests of banks individually or collectively."
Mr Tyrie also argued that the new body should seek to encompass every bank with operations in the UK, warning that if any were to shun the move to improve professional standards, it would damage the effectiveness of the initiative.
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