Charlotte Hogg, the new deputy governor of the Bank of England, broke the Bank’s official internal code of conduct when she failed to declare to the Threadneedle Street authorities that her brother worked for Barclays.
The chair of the Bank’s governing court, Anthony Habgood, said on Tuesday that it was a “very serious breach”, “extremely regrettable” and added that “it doesn’t look good”.
It emerged at an appointment hearing before the Treasury Select Committee on 28 February that Ms Hogg’s brother, Quintin, worked for Barclays as a "director in group strategy".
Ms Hogg, who is now the deputy governor in charge of markets and banking, told the TSC she had already disclosed this fact to the Bank’s authorities.
But in the wake of the TSC hearing, the Bank checked the internal records and discovered this was incorrect and there was no formal note of her brother's job.
Under the Bank’s code, Ms Hogg should have disclosed the potential conflict of interest when she joined the Bank of England as Chief Operating Officer in 2013.
“Regrettably, my oversight means that my oral evidence to the committee in this respect was not accurate,” wrote Ms Hogg in a letter to the TSC and offered her “sincere apologies”.
The breach is especially damaging to Ms Hogg because she told the TSC last week that she had helped to write the Bank's updated code of conduct.
Mr Habgood told the TSC on Tuesday he believed it had been an “honest mistake”.
Bradley Fried, deputy chair of the Court, also defended Ms Hogg under questioning by the TSC.
“I definitely don’t believe it’s a hanging offence,” he said.
Ms Fried added he would struggle to see the breach as grounds for rescinding Ms Hogg's appointment to the deputy governor position.
One former senior Bank of England policymaker said: “It is hard to imagine that this would have happened under Governor King, who was hyper-sensitive, and rightly so, to any and all potential perceptions of conflicts that might tarnish the reputation of the Bank.”
In her evidence to the TSC last week Ms Hogg said: “I am in compliance with all of our codes of conduct. I know because I helped to write them. I have discussed it with the company secretary.”
She also said she “didn't know” what her brother did at Barclays before she asked him for the purposes of filling in a questionnaire provided by the committee.
“I don’t discuss work with him and he doesn't discuss it with me. We mostly talk about his children,” she said.
The chair of the TSC, Andrew Tyrie, revealed on Tuesday that Quintin Hogg's role at Barclays has been been to examine regulatory changes, ring-fencing rules and capital requirements.
As deputy governor, Ms Hogg will sit on the Financial Policy Committee, which can adjust private banks' capital requirements.
She will also sit on the Monetary Policy Committee, which sets interest rates, and the board of the Prudential Regulation Authority and also the Bank's Court.
Ms Hogg's father is Viscount Hailsham, a former Cabinet minister in the 1990s. In 2009 it was revealed that he had claimed £2,115 of taxpayers' money to clean the moat of his country estate.
Her mother is Baroness Hogg, a former head of Sir John Major's Downing Street Policy Unit and chair of 3i Group. She is now a non-executive board member of the Finacial Conduct Authority.
Before joining the Bank in 2013 Charlotte Hogg worked for Santander UK.
The Bank's code states: “A relationship with a person or organisation outside the Bank should be disclosed where it may lead (or could be perceived to lead) to a conflict of interest or advantage – close personal relationships with those active in financial, economic or political journalism, Bank-regulated financial institutions and significant dealings with counterparties of the Bank or Bank suppliers, such as banknote printers or caterers, should all be disclosed."
“This will allow us to ensure that we are not put in situations where close personal relationships might be viewed as affecting our judgement, or where we could be perceived to have shared Bank information for advantage.”
It continues: “Failure to comply with our Code and its associated policies could lead to disciplinary action.”
Mr Fried said the breach would be discussed at a full meeting of the Court. But Mr Habgood said that he did not expect this process to result in the appointment of Ms Hogg being overturned.