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New BoE deputy Charlotte Hogg resigns after report

The Bank of England’s new deputy governor, Charlotte Hogg, has resigned after MPs said her professional competence “falls short of the very high standards required”.

Ms Hogg has been under pressure since admitting that she had failed for nearly four years to inform the bank that her brother was a senior executive at Barclays, even though she was partly responsible for drawing up the bank’s code of conduct.

Ms Hogg’s resignation came after the Treasury committee of MPs said they felt her “professional competence falls short” of the “very high standards” required to be the deputy governor for markets and banking.

“Professional competence for this role includes an ability to follow the rules, particularly those that one has had a hand in writing and enforcing,” the MPs said, in a report.

The report triggered her resignation, with Mark Carney, the governor, saying: “I deeply regret that Charlotte Hogg has chosen to resign from the Bank of England.”

Professional competence for this role includes an ability to follow the rules, particularly those that one has had a hand in writing and enforcing

“Since Charlotte joined the Bank almost four years ago, she has transformed its management and operations . . . The Bank today is stronger, more diverse, secure and effective in large part because of [her],” he added.

Ms Hogg, a former commercial banker who has been chief operating officer of the BoE since 2013, is the first deputy governor to resign since Rupert Pennant-Rea quit in March 1995 after it was revealed he had been having an affair with Mary Ellen Synon, a journalist, which potentially compromised his role.

In a resignation letter, Ms Hogg said she “should now insist” that the bank accept the resignation she first offered last week.

She said she had made “an honest mistake” but acknowledged that, as a public servant, she ought to “exceed the standards we expect of others”.

In addition, the bank said it was reconfiguring its compliance structures and putting responsibility for the code of conduct in the hands of its general counsel, who will then report to the chair of the audit and risk committee.

Over the weekend, several bankers had suggested that, if she remained in post, it would create the opportunity for employees of bank-regulated companies to use the “Hogg defence” if they were ever challenged by the regulator.

Ms Hogg first gave details of her brother’s role in written evidence she sent to the committee at the end of February.

When she appeared before MPs for a confirmation hearing, she said: “I am in compliance with all of our codes of conduct. I know that; I helped to write them.” But she admitted the following week that this statement was false.

The MPs said that Ms Hogg had not deliberately concealed her brother’s role, nor was any conflict of interest likely to have arisen in the past.

The report said that an “isolated failure” is not usually grounds for resignation. But it said Ms Hogg’s case was more serious. She had failed to declare her brother’s role for nearly four years, despite several opportunities to do so. She was in a position at the bank where she was responsible for helping to set the bank’s standards of conduct and should, therefore, have led by example. She also failed to demonstrate in the evidence she gave to the committee that she recognised the seriousness of her error.

The MPs said they disagreed with her assessment that there would be no future conflict of interest in her role, saying it was a “serious misjudgment” and that it believed there would be a “clear potential for conflict”.

John Mann, a Labour MP who sits on the committee, said on Twitter that this was the “strongest opinion ever made by a Treasury committee”.

The committee also said that the incident with Ms Hogg raised some “wider concerns” about the bank’s governance. However, the committee members said overall they “warmly welcomed” the progress under Mr Carney’s governorship to modernise the bank’s governance and increase transparency and accountability.

The committee’s new statement withdrew its previous conclusion, on the basis of Ms Hogg’s original testimony, which said: “We are satisfied that Ms Charlotte Hogg has the professional competence and personal independence to be the deputy governor of the Bank of England responsible for markets and banking.”

The committee said that, “had [the committee] known then what has since been disclosed, it would have taken a different view”.

Additional reporting by Mehreen Khan

Via FT