He said the financial services industry requires ‘fundamental change’ to build a culture of accountability and trust with the public, as the Financial Conduct Authority fined five banks £1.1bn just last week.
Carney said “the link between seniority and accountability had become blurred and, in some cases, severed”, meaning “standards may need to be developed to put non-bonus or fixed pay at risk”.
Speaking more generally, he added: “The repeated nature of these fines demonstrate that financial penalties alone are not sufficient to address the issues raised.
“Fundamental change is needed to institutional culture, to compensation arrangements and to markets.
“The succession of scandals mean it is simply untenable now to argue that the problem is one of a few bad apples.
“The issue is with the barrels in which they are stored.”
He spoke at length about rebuilding trust with the public, as he said: “The second pillar of the future of reform is to rebuild trust in finance.
“Trust between institutions, counterparties and investors is central to maintaining the ability of finance to function.
“Trust between regulators across jurisdictions is needed to maintain an open global system.
“And most fundamentally, trust between the public and the financial system is needed to maintain the social licence for finance to operate.”
Without a degree of trust the Governor added “the door will be opened to a level of regulation that constrains the ability of finance to innovate and support growth and trade efficiently”.
And he went further, commenting that “trust is needed in a wider context” between countries, adding that “to achieve its full potential, the financial system must remain global”.
He said the Financial Stability Board is committed to both pursuing global financial reform and keeping financial services open.
Carney concluded: “It is not merely that we should want to follow Churchill’s wish to see ‘finance less proud and industry more content’.
“We want to see industry content and finance taking justifiable pride in its contribution to society.”
