The Bank of England is to task a senior executive with the role of conflicts officer to avoid a rerun of the circumstances that led to the resignation of Charlotte Hogg as deputy governor after she failed to disclose her brother works for Barclays.
The conflicts officer will report to both the governor, Mark Carney, and Anthony Habgood, the chair of the court which oversees the Bank, following a report by Threadneedle Street’s non-executive directors commissioned after Hogg’s departure in March.
The report, prepared with help of lawyers at Herbert Smith Freehills, also recommends that the Bank’s head of compliance role be turned into a more senior position and that a system be put in place to capture and review data on relationships and conflicts.
Hogg resigned after the Treasury select committee of MPs published a highly critical report, prompted by her failure to disclose that her brother works for Barclays, which is regulated by the Bank.
A scion of one of Britain’s most high-profile political families, Hogg had initially insisted that officials at Threadneedle Street knew Quintin Hogg worked at Barclays before admitting she had not disclosed the role, in breach of the Bank’s code of conduct she had helped to write.
The report by the non-executives said her case provided lessons for the Bank, including stronger checks before appointments and greater clarity about who takes decisions about conflicts.
“Individuals are responsible for full, timely and accurate disclosures of relevant personal information, including making appropriate disclosures in the context of specific decisions. But it should be for others within the Bank to decide whether individual disclosures could represent a conflict, and how conflicts should be handled. This is particularly important for situations that could be perceived as conflicts, as individuals are typically not best placed to judge how their personal circumstances may be reasonably viewed by others,” the report said.
Before Hogg resigned, there was no requirement for any conflicts to be considered during the recruitment process or by the panel interviewing senior executives.
The report sets out the procedures on conflicts adopted when Hogg first joined the Bank in 2013 in the new role of chief operating officer. The usual processes were not followed and there was only a formal exchange of emails with the then chair of the court. “A more structured approach may have resulted in Ms Hogg’s brother’s role being registered at the outset,” the report said.
The Treasury select committee had previously said she missed three opportunities to disclose her brother’s role and did not disclose his position in strategy at Barclays in her application for deputy governor in December 2016. She only did so when she was preparing to appear at the select committee in late February in a pre-appointment hearing for her new role as deputy governor for markets and banking.
Hogg was once regarded as a potential successor to Carney. Her parents had leading roles in Sir John Major’s government and her grandfather Quintin Hogg, better known as Lord Hailsham, was a prominent Tory.
Her former roles as chief operating officer and deputy governor have now been split, with Sir David Ramsden, the Treasury’s chief economic adviser, named deputy governor and Joanna Place, who was previously the human resources director, becoming chief operating officer.
The Bank also includes detail of how other conflicts of interest are handled. The Unison general secretary, Dave Prentis, a non-executive director of court, recuses himself from discussions on the Co-operative Bank because of his position on the board of Unity Trust Bank, in which Co-op used to have a 26% stake.
John Stewart, a former non-executive of the court, recused himself from meetings in 2014 and 2015 in relation to Legal and General, the insurer which he chaired at the time.
Carney said the recommendations in the review would be adopted by the Bank. “In addition to ensuring that we meet best practice, addressing the review’s recommendations will give everyone who works at the Bank greater clarity on what is expected, and will help reassure all of those to whom we are accountable that we have an effective and robust approach to conflicts management,” he said.
This article was written by Jill Treanor, for theguardian.com on Wednesday 9th August 2017 13.37 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010