UK's bank standards body gets support from BoE's Carney

Bank of England governor Mark Carney has backed a plan by Britain's biggest banks to set up a new body to improve standards in an industry rocked by a string of scandals. The Banking Standards Review Council (BSRC), funded by but independent from the banks, is to be set up this year after banks accepted recommendations from Richard Lambert, a former director general of the Confederation of British Industry.
Banks are trying to repair their image tarnished by the 2008 financial crisis and scandals including the rigging of benchmark interest rates, allegations of foreign exchange market rigging and the mis-selling of loan insurance. "Rebuilding confidence and trust in the banks is especially vital in the UK, because of the size of the banking system and the importance to the economy of London's role as an international capital market," Lambert said on Monday. Carney urged all banks that operate in Britain, both domestic and foreign, to support the initiative.
"We need a financial system that is safe, fair and acts with integrity. The Bank of England is doing its part to ensure safety and soundness. Integrity, however, cannot be regulated. It must come from within," he said. The council will work with banks to create a new code of practice for the industry. But Britain's financial regulator will retain responsible for disciplining banks for wrongdoing.
Britain's biggest six banks - Barclays, HSBC , Lloyds Banking Group, Royal Bank of Scotland , Santander UK and Standard Chartered - and its largest customer-owned bank, Nationwide, asked Lambert to come up with proposals for the body last year. The Parliamentary Commission on Banking Standards, a group looking into ways to reform banks, supported the creation of a professional standards body in its final report last year but said it could take a generation for it to become fully effective.
"While this ambitious long-term project gets under way, wide-ranging reform is needed now on a number of fronts to secure improvements to standards," the Commission's Chairman Andrew Tyrie said on Monday. The BSRC will champion good practice, requiring banks to commit to improving their culture and to report back on their performance to the public each year. It will also produce an annual report highlighting progress made the industry and by individual banks, and what more needs to be done.