The Mansion House is the official residence of the Lord Mayor of London. It plays host to the Mansion House Dinner which often features keynote speeches by politicians, public figures and business leaders. During this year’s dinner, the Governor of the Bank of England and the Chancellor of the Exchequer used the event to attempt to draw the line under irresponsible behaviour within the financial sector.
The Chancellor, who also outlined plans to require the government (any UK government) to be fiscally prudent by legislating to ensure that it had to operate on a budget surplus when the economy was growing, noted: "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." Cynics will have a ready answer for his rhetorical question, of course.
For his part, Mark Carney accepted that the Bank of England had shown that it had feet of clay in the lead up to the Global Financial Crisis (before his own stewardship of the Bank, naturally).
"Though markets can be powerful drivers of prosperity, markets can go wrong. Left unattended, they are prone to instability, excess and abuse. 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,” he said.
In the lead up to the crisis, the Bank was fettered by arcane and ambiguous rules and had been unable to identify risks within the financial system caused by banker’s riskier and unethical behaviour and consequently, it had failed to control markets where abuse was rife effectively.
"The age of irresponsibility is over," Mr Carney promised. "Criminal sanctions should be updated, with market abuse rules similarly extended and maximum prison terms lengthened.”
Messers Carney and Osborne were using the occasion to herald the conclusions of the newly published “Fair and Effective Markets Review”, published jointly by the Bank, The Treasury and the Financial Conduct Authority. The report calls for a “crackdown” on rogue traders (i.e. anybody getting caught) and suggests creation of a Market Standards Board intended to end the “age of irresponsibility” with traders also falling under its remit. Existing criminal penalties would have maximum sentences increased from seven to ten years – cynics may ask why wrong-doers aren’t currently doing up to seven years in the Klink, but then they already know the answer, of course.