Mark Carney's incoming deputy under fire for family links to Barclays Bank

Tim Wallace and Szu Ping Chan 28 February 2017 • 11:02am

Top Bank of England official Charlotte Hogg has come under pressure from MPs due to her family links to Barclays - a bank she will soon start regulating in her new job as deputy governor for markets and banking.

She may have to sit out of discussions relating to Barclays, despite her hugely important role in monitoring a bank whose stability has major implications for the wider UK economy.

Ms Hogg, who has served as the Bank of England’s chief operating officer since 2013, is replacing outgoing deputy Minouche Shafik in the role. She will sit on the Monetary Policy Committee, Financial Policy Committee and Prudential Regulation Committee. She starts the new job on March 1.

Andrew Tyrie MP said she should look at recusing herself from Bank of England discussions on Barclays Credit: Laura Lean/PA Wire

But her brother works for Barclays in a job planning the bank’s long-term strategy, which her decisions could influence.

“My brother is part of Barclays’ strategic planning group, he has been for some number of years,” she told the Treasury Select Committee.

“I don’t discuss work with him and he doesn't discuss it with me. We mostly talk about his children.”

Ms Hogg has declared this potential conflict of interest to the Bank of England and promised not to discuss work with her brother, noting that she did not even know his job until she asked him specifically for the purpose of declaring it to the Bank.

Ms Hogg replaces Minouche Shafik, who is moving to become director of the London School of Economics Credit: David Rose

Ms Hogg said she welcomed the introduction of curbs on high loan-to-income mortgages in 2014.

The former Santander executive said: "I've always worried about people who are close to the edge in terms of what they can afford and where they stretch too much.

"So, from the basis of my experience, as well as from the basis of financial stability I really welcomed those changes in underwriting standards."

In written evidence to the TSC, she also said policymakers were "very alert to risks around consumer credit" and "already monitoring" growth in borrowing on credit cards and loans.

While the Bank expects economic growth to slow in the coming years amid higher inflation and a slowdown in consumption growth, Ms Hogg warned that "the reaction to consumption could be more sudden", with consumers reacting "rapid[ly]" to bad news.

She told MPs: "What you learn from consumer businesses is people can move fast and surprise you".

"I'm very mindful of a period of my life when I was working at Santander and we were downgraded. The communication and consumer expectations moved very fast over a few days, which impacted our deposits quite quickly," she said.

Ms Hogg, who will be in charge of the Bank's balance sheet and its £435bn stockpile of asset purchases, said she believed quantitative easing had not created a bond bubble.

This is in contrast to Andy Haldane, the Bank's chief economist, who said in 2013 that central banks had "intentionally blown the biggest government bond bubble in history.”

Speaking on Tuesday, Ms Hogg described the UK gilt market as "effective", adding: “I don’t see evidence that we have a bubble at the moment, nor do I see evidence that it’s burst."

Ms Hogg also signalled that she backed the current stance of monetary policy, as she described inflation expectations as "some of the most important evidence that I will be looking at" in meetings.

She said long term inflation expectations were currently below historic averages, even as inflation is expected to overshoot the Bank's its 2pc target for the next three years.

Ms Hogg suggested that she would vote for interest rates to remain at a record low of 0.25pc as long as inflation expectations remained anchored. "If they cease to expect that, then I think you have to worry about the path."

Code of compliance

Ms Hogg helped to write the Bank of England’s codes of compliance and insisted she does meet those, and will declare the conflict at the beginning of all relevant meetings.

But Andrew Tyrie, the MP who chairs the TSC, said she needed to look at more serious steps.

“Did you consider whether you should recuse yourself from any discussion of Barclays when those take place on the PRC?” he asked.

Ms Hogg said: “I haven’t sat on the PRC yet. I think it is certainly a possibility that I could recuse myself, but I wouldn't do it without discussing it with the chairman, and I am happy to do that.”