Belfast Telegraph

Mark Carney defends Bank of England procedures after resignation of deputy

Mark Carney has publicly defended the Bank of England's governance procedures after deputy governor Charlotte Hogg was forced to resign last week for failing to declare her brother works for Barclays.

The governor said, while Ms Hogg's breach of conduct was an "honest mistake", the Bank took a "tougher response" than would be expected in the private sector, having given her a formal warning and reassigning her chief operating officer duties.

"For those who have questioned whether we 'get it', we do.

"We know this honest mistake was also a serious mistake, one that was compounded by the fact that Charlotte Hogg had overseen the development of our new code.

"We were clear upfront that there must be consequences for both her and the Bank," the governor said during a Banking Standards Board panel in London, marking his first public comments since Ms Hogg resigned last week.

Mr Carney explained independent directors of the Bank's Court have also launched a "widespread review" and "reconfigured reporting lines and internal structures to improve governance.

"Consistent with our higher standards, the Bank planned a tougher response than we would expect in the private sector, but one that, in our judgment, was still proportionate to an honest mistake that was freely and transparently admitted," Mr Carney said.

Ms Hogg stepped down less than a fortnight into the role after coming under heavy fire for breaking the Bank's code of conduct by not declaring the conflict of interest.

However, she will remain at the Bank for up to three months for "transition purposes", according to the Bank.

The governor argued that the consequences were "proportionate", given the "severity" of the incident and Ms Hogg's track record, as well as the Bank's wider response.

"An honest mistake that is freely admitted for which a firm takes prompt remedial action is not a firing offence," he said.

Mr Carney also said that "recent events" should not result in tighter industry standards, which, he said, risks driving away qualified senior bankers.

"That could have senior managers running scared, drive compliance underground and undermine our collective objectives. Another risk, flagged by some, is that it will also become harder to find candidates of sufficient calibre willing to take on senior roles."

He said he met the chief executives or chairmen of all major banks last week, who were concerned about "precisely such unintended consequences".

But the Bank of England chief also warned that the banking sector was still suffering from a "crisis of legitimacy" in the wake of a series of scandals involving mis-selling, and manipulation that has undermined trust in the financial system and markets more broadly.

He said it "ought to be of grave concern" that only 20% of UK citizens believe banks are well run, compared with 90% in the late 1980s.

Global bank misconduct costs have totalled more than 320 billion US dollars (£256.7 billion), a total that Mr Carney said could have supported up to 5 trillion US dollars (£4 trillion) in lending to households and businesses.