Canada’s former Bank of Canada governor is talking tough with Britain’s insurance companies, telling them in his capacity as that country’s central banking governor that senior executives are under the microscope when it comes to accountability.
In a comment piece published in The Times newspaper, Mark Carney said “integrity, honesty and skill” in senior managers are not optional, whether they are in charge of insurers, investment banks or building societies.
It is the same message Carney delivered to U.K. bankers earlier, as he has stated that the Bank of England wants senior managers of insurance companies to be held accountable if things go wrong and policyholders lose out.
“So alongside reforms that Parliament has asked us to make to hold senior bankers to account,” said Carney, “we will create a similar regime for senior managers in the insurance industry.”
The new laws mean bankers found guilty of ‘reckless misconduct’ could face jail, although Carney did not go into detail as to what sanctions insurance executives could face.
Carney also warned that although insurers escaped largely unscathed from the meltdown in global credit markets seven years ago, they too face risks.
The Bank would be ‘vigilant’ about the flood of new capital going into higher-risk investment vehicles, said Carney, as record low interest rates put pressure on insurers to consider higher-risk investments to improve their returns.
Britain made changes to its financial regulation in 2013, launching a new watchdog operating from the Bank of England – the Prudential Regulation Authority – with a mandate to scrutinize banks and insurers.
