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MPs ask how FPC ‘insider’ can be an external member

The Treasury select committee has questioned if interim Financial Policy Committee external member Alastair Clark can be considered an external appointment after working at the Bank of England and the Treasury for 40 years.

The Treasury has announced three of the four interim FPC external members, including Clark, ex-Deutsche Bank head of global banking and co-head of investment banking Michael Cohrs and former US Federal Reserve vice chair Donald Kohn.

In an evidence session this week, TSC member Michael Fallon asked Clark if he can be considered external with his career history. Clark joined the BoE in 1972 and worked as an adviser to the governor before joining the Treasury in 2009. Fallon said: “With 40 years at the Bank and the Treasury, how can you be an external member of anything? You are the ultimate insider.”

Clark admitted there may be “a public perception problem” with his appointment but added he is no longer associated with the bank and that his work has given him good experience of the industry.

Under current proposals, the FPC will be made up of six members from the BoE, Financial Conduct Authority chief executive Martin Wheatley and four external members who can demonstrate “direct experience as financial market practitioners”. The FPC will begin operating in 2012.

Select committee chair Andrew Tyrie said Cohrs is the only member with experience as a practitioner. He said: “We need more practitioners on board Mr Cohrs is the only one on the committee at the moment and we will need more in future.”

The committee has accepted Clark’s interim appointment but recommended that a fifth external member be appointed.

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