When one says the UK banking industry, two things come to mind. First is the legendary mis sold PPI scandal that costs about £28 billion so far. Next comes forex rigging and Libor rigging scandals, which amount to another billion pounds’ worth of fines.
According to a Senior Bank of England official, the banks’ failures to manage Forex and Libor rigging are comparable to a fighter pilot that ignores safety checks and goes out to battle without any strategy.
Bank of England Director of Markets Strategy Andrew Hauser said that good conduct is misaligned with profitability for banks. This has led many traders to rig the system to make money from their customers.
Many UK banks have claimed to have improved their systems but the implementation of such rules is questionable.
Officials said that repeated instances of bad behavior indicated that banks still haven’t learned from their past actions. Some of these previous behaviours happened again after the banks have been fined.
Hauser said: “Navy pilots don’t obsess over safety for appearance’s sake, or out of fear of a fine or court-martial from the authorities. They do it because if you’re not safe, you or others die.
“We need to ensure that incentives are similarly aligned in banking. Traders will never face the same threat to life and limb as fighter pilots. But nothing focuses the mind as effectively as the knowledge that professional demise for themselves and their teams is a real possibility if they don’t conduct themselves properly.”