It was commissioned by Court and undertaken by the Bank’s non-executive directors1 with support from the Bank’s Independent Evaluation Office.
The Bank of England’s approach to conflicts of interest
The Governors and the Chair of Court2 welcome the Review and its recommendations, all of which will be implemented. A number of the recommendations are already being addressed:
- Following the introduction of new Statutory Conflicts Codes at the end of 2016, and in the light of the findings of the Review, consistent processes for authorising and managing conflicts in the PRC, FPC and MPC have been improved and documented. As recommended by the Review, the Bank will ensure that any decisions under these processes are notified to Court, which will review the Codes at least annually.
- The 2017 update of the Bank’s Code of Conduct (“Our Code”), due in the Autumn, will provide an opportunity to update and clarify requirements, including for notification of personal relationships as recommended by the Review; these will be repeated in the annual attestation for staff.
- The Bank has been working closely with HM Treasury to ensure that conflict checks for new appointees to Court and the policy committees are carried out effectively, and the same applies to senior appointments made by the Bank.
- The Head of Compliance reports regularly to the General Counsel and Court’s Audit and Risk Committee on breaches and other issues relating to Our Code.
As recommended by the Review, the Bank will designate a Conflicts Officer with overall executive responsibility for conflict identification and management. Over the coming weeks the Bank will consider the other organisational and technology changes recommended in the Review, including the provision of a centralised system for capturing and reviewing data on relationships and potential conflicts.
Governor Mark Carney said:
“I welcome this review and its recommendations, which will be implemented in full. The Bank holds itself to the highest standards, which is why it is important to address any actual or perceived deficiencies in our approach to managing conflicts of interest. In addition to ensuring that we meet best practice, addressing the Review’s recommendations will give everyone who works at the Bank greater clarity on what is expected, and will help reassure all of those to whom we are accountable that we have an effective and robust approach to conflicts management.”
Bradley Fried, Deputy Chairman of Court, who led the Review said:
"This has been a thorough process, involving Bank of England staff and input from Herbert Smith Freehills LLP and the National Audit Office. The priority has been to publish at the earliest possible opportunity a comprehensive review, aligned to independent best practice benchmarks. I am grateful for everyone's commitment and expertise which has enabled its timely publication".
1 Excluding the Chairman. The Review was led by Bradley Fried, the Senior Independent Director.
2 As the other members of the Bank’s Court.