Carney defends Bank of England over Hogg resignation

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Earmark Carney has defended the Bank of England’s handling of Charlotte Hogg’s abandonment during a speech on banking ethics.

He said the former deputy governor descried a serious but «honest mistake» and that the Bank would learn from the romance.

But he also warned against an overly punitive approach to misconduct in the banking effort, saying it could leave «senior managers running scared».

Ms Hogg forsake earlier in March over a conflict of interest.

She had failed to mention, on the eve of her appointment, that her brother was a senior executive at Barclays — a lender set by the Bank of England.

‘Excessive reliance’

In the speech, Mr Carney said: «A series of smirches ranging from mis-selling to manipulation have undermined trust in banking, the monetary system, and, to some degree, markets themselves.

He added: «The economic consequences prepare been enormous. Global banks’ misconduct costs have now reached during the course of $320bn (£257m) — capital that could otherwise have buttressed up to $5tn of lending to households and businesses.»

He said the financial system needed «stronger rubs». However, he also urged more focus on creating a better banking discernment.

This included reducing opportunities for bad behaviour and requiring compensation predominates «that align better risk and reward».

He also suggested there had been an «unreasonable reliance» on «punitive» fines of firms who misbehaved.

«We have emphasised issues to ensure firms and their employees take responsibility — individually and collectively — for their own direction,» he said.

‘Transparently admitted’

On Ms Hogg’s appointment, Mr Carney said he had been exonerated upfront that there should be consequences for both her and the Bank.

Respect, he called her omission an «honest mistake that was freely and transparently granted» and «not a firing offence».

He said he respected the Treasury Committee’s decision to report a highly critical report on Ms Hogg, as well as her decision to resign.

But he reported the affair illustrated his wider point about regulation.

«We must not let just out events inadvertently tighten perceived standards for the industry because that could enjoy senior managers running scared, drive compliance underground and drain our collective objectives.

«Another risk, flagged by some, is that it on also become harder to find candidates of sufficient calibre avid to take on senior roles.»

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