BOE's Markets Chief Says Banking Still Has a Public Trust Issue
(Bloomberg) -- Britain’s banking industry has made big steps to improve its conduct since the financial crisis, but it’s going to take a long time to fully convince the public, according to Bank of England Deputy Governor Dave Ramsden.
“The crisis and the misconduct and the scandals cast a long shadow,” Ramsden said in an interview at Bloomberg’s European headquarters in London, where the central bank held a conference on efforts to improve market behavior.
Part of the problem for the finance industry is that news about fines and poor management actions continue to emerge. Earlier this month, Barclays Plc Chief Executive Officer Jes Staley was fined 642,430 pounds ($860,856) for attempts to uncover a whistle-blower. Royal Bank of Scotland Group Plc has just reached tentative agreement to pay a $4.9 billion fine for misconduct by its investment bank.
“We’ve just got to keep working on earning back that trust, to the extent we can,” said Ramsden, 54, a veteran of the U.K. Treasury who’s now in charge of markets and banking at the BOE.
The central bank also on Thursday provided an update on its Fair and Effective Markets Review, published in 2015, which made recommendations on compensation and conduct. It said there’s been “significant progress,” and Ramsden noted improvements in strengthening market standards, benchmarks and individual accountability.
“There’s a lot more to do,” said Ramsden. “Markets are always going to be evolving, behavior’s going to be adapting to that, regulation is going to have to be adapting.”
Opening the conference, BOE Governor Mark Carney said it’s time to focus on incentives to steer individuals away from rule-breaking behavior rather than rely on “punitive ex-post fines.”
According to Ramsden, improving banking culture could even be beneficial for the economy, which has been growing at a reduced potential rate since the Brexit vote. “If we’ve got a really strong culture in this country around the financial sector, that’s going to encourage the best and brightest” and could lead to some “upside” to growth, he said.
Still, the work can often be thankless.
“We’re never going to be able to declare victory,” he said. “Or if we do we’ll be kidding ourselves that there’s 100 percent confidence in markets, because there are always going to be new challenges.”
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