Charlotte Hogg has resigned as deputy governor of the Bank of England after MPs concluded she was not up to the role she was promoted into barely two weeks ago.
Her departure was announced 25 minutes after the Treasury select committee published a highly critical report prompted by her failure to disclose that her brother works for Barclays, which is regulated by the Bank of England.
A scion of one of Britain’s most high-profile political families, Hogg had initially told MPs last month that the Bank was aware of Quintin Hogg’s role at the high street lender. She then admitted days later she had not made the disclosure and was therefore in breach of the Bank’s code of conduct she had helped to write.
The admission forced the MPs to hold a series of private meetings after which they issued their unanimous report, concluding Hogg’s “professional competence falls short of the very high standards required to fulfil the additional responsibilities of deputy governor for markets and banking”. Hogg had joined the bank as chief operating officer in 2013 but moved to the number two job on 1 March.
John Mann, a Labour MP who sits on the committee, described it as the “strongest opinion ever made by a Treasury committee”. MPs do not have the power to block roles at the Bank but the views of the committee hold considerable sway over the UK’s financial sector and Threadneedle Street.
It is a dramatic fall from grace for Hogg, who was once cited as a potential successor to the Bank governor, Mark Carney, to whom she was a key ally and a linchpin of his effort to overhaul the staid institution.
Her departure was criticised by former chancellor George Osborne who tweeted: “Charlotte Hogg is a real loss to public life. Would she have gone if she had been an older man whose sister worked at a bank? I wonder.”
Illustrating the turmoil inside the Bank of England, Carney issued Hogg with a verbal warning and initially resisted her resignation.
Carney said: “While I fully respect her decision taken in accordance with her view of what was the best for this institution, I deeply regret that Charlotte Hogg has chosen to resign from the Bank of England.”
Hogg’s letter to Carney – dated Monday ahead of the formal publication of the MPs’ report – showed she had offered to resign last week.
“Last week I offered you my resignation in recognition of the fact that I made a mistake in not declaring my brother’s work on the forms that the Bank requires. It has become clear to me that I should now insist,” said Hogg in the letter, which was also sent to Anthony Habgood, the chair of the Bank’s court, akin to its board.
“As I have said, I am very sorry for that mistake. It was an honest mistake,” she said. “I have not shared confidential information or misused it in any way. I do not have any financial relationship with my brother and I am utterly committed to the safeguarding of confidential information and the separation of a home and work life. However, I recognise that being sorry is not enough.
“We as public servants should not merely meet but exceed the standards we expect of others.”The MPs said her evidence to their committee had caused them concern, and they would not have issued a report on 2 March concluding she had the professional competence for the role had they had later known about her breaches of the Bank’s code.
“Professional competence for this role includes an ability to follow the rules, particularly those that one has had a hand in writing and enforcing; an understanding of why those rules are important; and an awareness of the risks arising from actual and potential conflicts of interest, and the perceptions of conflict,” the report said.
Andrew Tyrie, the Conservative MP who chairs the Treasury select committee, said: “This is a regrettable business with no winners. Ms Hogg has acted in the best interest of the institution for which she has been working. This is welcome.”
He said the committee would begin work on reviewing the court, which commissioned a review to look at what could be learned from the events surrounding Hogg’s departure.
A departure date has not been agreed for Hogg, who is paid about £350,000 a year, but she is likely to stay for three months and waive any payoff. On Wednesday she cast her first vote on interest rates after taking up her seat on the monetary policy committee which came with the deputy governor role. The Bank will announce on Thursday, if it intends to move interest rates from the all-time low of 0.25% to which they were cut after the vote for Brexit.
The Bank is expected to replace Hogg with two appointments – one as deputy governor and one for her former role as chief operating officer.
Hogg is an Oxford graduate whose career prior to the UK’s central bank had included stints at high street lender Santander and at US bank Morgan Stanley. 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 who almost won the Conservative party leadership after the resignation of Harold Macmillan in 1963.
Philip Hammond, the Chancellor, said: “I am very grateful for Charlotte Hogg’s service at the Bank of England. I wish her every success in her future plans.”
Ten key points from the Treasury select committee report into Charlotte Hogg
- She was in breach of the Bank of England’s code of conduct from when she joined in July 2013 as chief operating officer. She did not disclose her brother Quintin’s role at Barclays – regulated by the Bank – until 22 February when she filled in a questionnaire from the Treasury select committee before her evidence about her promotion to deputy governor.
- 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 on 3 December 2016. “Were it not for the committee’s questionnaire and subsequent scrutiny, the clear perceived and potential conflicts that would arise in her new role may never have come to light,” the committee said.
- Hogg, albeit inadvertently, misled the committee. She said she was in compliance with the code of conduct, which she had written, when she gave evidence.
- When she did acknowledge her brother’s role she made a serious misjudgment in concluding that she did not anticipate there were would be actual or potential conflict in the future.
- She did not appreciate the seriousness of her failure to comply with the code during the previous four years when she was chief operating officer. She attended meetings of the court while her brother was in a regulatory role at Barclays.
- She did not lead by example in her breaches of the code.
- She did not deliberately conceal her brother’s role from the Bank, nor is there any evidence to suggest she or anyone else has profited from the conflict of interest.
- The Bank’s selection panel, which recommended her for the promotion to deputy governor, did not know about the “multiple lapses” with the code and “completed its work without the benefit of pertinent information”.
- Hogg’s “professional competence falls short of the very high standards required to fulfil the additional responsibilities of deputy governor for markets and banking”.
- The Bank’s court may need to be reformed. The select committee will launch a review of the court.
