Its conclusions and recommendations are as follows:
We note the apparent reticence of Mr Cohrs about speaking out in speeches and statements about his work while on the FPC, and we would ask him to reconsider.
We are satisfied that Mr Cohrs has the professional competence and personal independence to be an external member of the interim Financial Policy Committee.
We wish him every success in his new role.
We are satisfied that Mr Clark has a great deal of professional competence. Whether he has the necessary direct experience to be an external member is not so clear.
On the question of his personal independence, we draw attention to the role that external members should play:
As the TSC rightly points out, these non-Bank members will play a vital role in ensuring that a diverse range of experience and views contribute to the development of macro-prudential policy and it will be essential to ensure that these members have the necessary knowledge, experience and expertise to play this role fully. In particular, it will be important to ensure external members are able to offer insights from direct experience as financial market practitioners—not only in banking, but also other sectors such as insurance and investment banking. At the same time, given the sensitivity of the FPC’s discussions and decisions, the external members should not have any significant conflicts of interest, as this would prevent them from fully participating in the work of the Committee.
Mr Clark’s long experience at the Bank of England and then at the Treasury means that it is difficult not to regard him as an ‘insider’. He accepted the need for him to demonstrate his independence. While we have no doubt of his intention to behave independently, we are concerned at the perception there will be of the extent of his independence.
We accept the case for Mr Clark being appointed to the interim FPC while it has no legislative basis. He has much to offer the body from his knowledge of regulatory issues. But to ensure that the interim FPC has the intended representation of wider views, we recommend that a fifth external member also be appointed.
The role of external members, and the balance between internal and external members, are issues that we will address further in our forthcoming Report on the accountability of the Bank of England.