Mark Carney
Bank of England governor Mark Carney said the central bank "holds itself to the highest standards" Reuters

The Bank of England defended itself from criticism that it dithered over the resignation of deputy governor Charlotte Hogg by saying it handed down "a tougher response than we would expect in the private sector".

Hogg was last week forced to resign just a fortnight into her appointment after it was revealed she had failed to inform the Bank of her brother's job at Barclays – a lender that she would have responsibility for regulating in her position.

Disclosure of family relationships for senior managers is required under the Bank's code of conduct, which Hogg helped draw up.

But there was a two-week gap between Hogg's eventual family disclosure to the MP's Treasury committee and her departure from the Bank.

During this period senior bankers at top lenders said if Carney stood by the former financier, they did not see why they should be bound by ethics rules if she continued to police them.

But Bank governor Mark Carney said today (21 March) the central bank "holds itself to the highest standards".

He was speaking at conference on banking standards held at the Bank's Threadneedle Street headquarters in the City.

Tougher Response

Carney added: "The Bank planned a tougher response than we would expect in the private sector, but one that, in our judgement, was still proportionate to an honest mistake that was freely and transparently admitted."

The governor said even though Hogg had made an inadvertent error, the omission was "compounded by the fact that Charlotte Hogg had overseen the development of our new code".

Hogg was forced to quit after a damning report from the Treasury committee, which said she did not have the "competence" required to hold one of the most powerful positions at the Bank. She first joined the central bank in 2013 as chief operating officer.

The Bank has pledged to carry out an internal review into the circumstances around Hogg's resignation with the help of the Independent Evaluation Office, Internal Audit and the National Audit Office, and will publish the results.

But Carney added he did not want private lenders to think the Bank wanted a "one strike and you are out" policy to operate for managers across UK financial services.

Carney said: "An honest mistake that is freely admitted for which a firm takes prompt remedial action is not a firing offence."

Running scared

He added: "We must not let recent events inadvertently tighten perceived standards for the industry because that could have senior managers running scared."

The governor said he had spoken to the chairmen and chief executives of all the country's major banks last week to reassure them about the new code of conduct.

He added: "I'm glad I did because they were all concerned about precisely such unintended consequences."

The resignation will leave the Bank with no female deputy governors and, come the summer, only one woman on its three main policymaking committees. Carney has struggled to make the central bank more diverse since he joined in July 2013.