LONDON — Bank of England Governor Mark Carney has publicly addressed the aborted appointment of Charlotte Hogg as Deputy Governor at the central bank for the first time since she was forced to resign in an ethics row last week.
Hogg was Chief Operating Officer at the BOE before being nominated to become Deputy Governor in charge of markets and banking.
However, Hogg was caught up in a conflict of interest row after it emerged that her brother worked at Barclays and she had not disclosed the connection. This violated the Bank’s disclosure rules around its “Senior Managers’ Regime.” Hogg, in fact, developed these rules, which are meant to hold senior managers within banks responsible for misdeeds.
Hogg resigned last week minutes after the influential House of Commons’ Treasury Select Committee (TSC) made clear it did not support her appointment to the deputy governor role. The TSC said her “professional competence falls short of the very high standards required.”
Bank Governor Carney said at the time that he “deeply regret[ed]” Hogg’s decision but understood it in a brief statement when the resignation was announced.
Prior to Hogg’s resignation, many bankers expressed alarm at the apparent lax treatment. An unnamed senior banker told the Sunday Times before Hogg’s resignation: “I don’t see why we can’t say we are only human when we are accused of failing to disclose similar conflicts of interest. We will be asking for a pass should we fail to disclose something to the regulator.”
At a Banking Standard’s Board event on Monday, Carney hit back at this criticism, saying that “this honest mistake was also a serious mistake,” and emphasising that: “For those who have questioned whether we ‘get it,’ we do.”
Carney said the BOE took proportionate and serious action after Hogg’s breach was discovered. Hogg waived her salary increase and the Bank launching an internal review. The governor said: “We were clear upfront that there must be consequences for both her and the Bank.”
He said he would expect similar responses from private sector banks that breach the Senior Managers’ Regime (SMR) rules.
Carney added that, while he respected the Treasury Select Committee’s verdict and Hogg’s decision to resign, he did not think it was proportionate to the offence.
Carney said: “The SMR is about clear responsibilities, proportionate consequences, and developing a culture of openness and accountability… An honest mistake that is freely admitted for which a firm takes prompt remedial action is not a firing offence.”
The governor said he spoke to the CEOs of major banks last week to reassure them that regulator’s enforcement of SMR rules on their executives would not be as harsh as Hogg’s treatment.
Carney said: “We must not let recent events inadvertently tighten perceived standards for the industry because that could have Senior Managers running scared, drive compliance underground and undermine our collective objectives.”
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