Financial relationships

Overview

Why do we need this policy?

All of us face decisions about managing our finances, including where to save or invest our money. Those of us who join the Bank midway through our career may also retain connections with a previous employer, for example through membership of a company pension scheme. The information that we have access to is often not in the public domain and our role as a regulator and policy maker creates a risk that we could be perceived as using the Bank’s information to further our personal interests if we do not take appropriate steps to guard against this.

That is why the Bank also needs to know about any ongoing relationships with financial institutions that might influence or be perceived to influence your judgement or affect your decisions at work.

Who does this policy apply to?

This policy applies to all of us working at the Bank. This includes consultants, contractors, and agency staff.

What you must know or do?

You must disclose certain financial relationships that create a continuing financial interest in one of the firms that we regulate. You must do so on joining the Bank and update them if/when they change. In addition, once you have joined the Bank, you must seek permission before you make certain personal financial transactions (see the Personal financial transactions policy).

1: What relationships do I need to declare?

1.1. Direct holdings of securities or related investments in a Bank-regulated firm^{footnote [1]} or its financial holding company, including stock options and share related reward schemes.

1.2. Direct holdings of individual gilts.

1.3. Holding a balance or deposit in a Bank-regulated firm of a value greater than the FSCS limit – currently £85,000 per person per firm. (If you have accounts that are covered by temporary high balances protection under the FSCS scheme – up to £1 million for six months for certain life events – you are not required to disclose this).

1.4. Holding an investment or a pension product with a Bank-regulated insurer whose return depends in part on the profits of the insurance company – for example, a ‘with profits’ policy.

1.5. Any other financial relationship that could reasonably be considered a potential conflict of interest. This would include deferred remuneration arrangements.

1.6. Similarly, you are required to disclose these types of financial relationships held by another individual or organisation where you direct or advise on their financial arrangements.^{footnote [2]}

1.7. Annex 1 sets out a flowchart to help you understand which financial relationships you need to disclose.

2: Your day-to-day work

2.1. If a potential conflict of interest relating to a financial relationship arises in the course of your day-to-day work, you should bring this to the attention of your manager. Your general disclosure in the Our Code Compliance system is not a substitute for this responsibility. If you are unsure about whether to disclose a particular financial relationship, please seek guidance from the Conflicts Team.

3: Protecting your information

3.1. The application of this policy will be in accordance with the relevant data protection legislation. For information on how the Bank processes your data, please see our staff data privacy notice.

Key policy requirements

What support is available to help you comply with this policy?

The following documents will aid your understanding of, and compliance with, this policy:

• Our Code.
• Staff Handbook (see Section C2).

What is the impact of non-compliance?

If you realise you have breached – or suspect that you might have breached – a requirement in this policy please tell AskCompliance as quickly as possible, so that the issue can be reported and redressed under the Bank’s Breach management policy. The Bank gives credit for you taking prompt responsibility for your mistakes. You should be aware that failing to discharge your responsibilities could lead to disciplinary or other action.

Annexes

• Annex 1: Do I need to declare a financial relationship?

  Figure 1: Flowchart to help you understand if you need to declare a financial relationship

  

  Box A: Financial relationships that must be declared

  • direct holdings of securities or related investments in a Bank-regulated firm, or its financial holding company, including stock options and share-related reward schemes;
  • direct holdings of individual gilts;
  • balances or deposits in a Bank-regulated firm greater than the FSCS compensation limit (currently 85,000 per person per firm); or
  • holding an investment or pension product with a Bank-regulated insurer whose return depends in part on the profits of the insurance company – for example a ‘with-profits’ policy.

• Annex 2: Considerations for line managers and example mitigants

  2.A: Questions from a team member about whether to declare a financial relationship

  If a member of your team comes to you for advice about whether to declare a financial relationship, ask yourself whether the relationship falls into any of the categories in Annex 2.B. If so, the relationship must be declared.

  Please ask them to confirm how the relationship falls into one of the categories in Annex 2.B if you are unsure. For example, shares held in banks and insurers via a tracker fund do not need to be declared, neither do bank accounts where the combined amounts held with a firm are below the FSCS limit. If a Bank-regulated firm is acting as the asset manager for a staff member’s investments, this does not need to be declared as a financial relationship, but a ‘with-profits’ policy held with that same firm would need to be declared, because it gives the individual an ongoing interest in the firm’s profitability.

  If a relationship needs to be declared, your team member will need to do this in the Our Code Compliance system. You will receive an automatic notification of a financial declaration, and you will need to take some follow-up action (see below).

  You may need to seek further information from the individual before you can decide. If you are still unsure whether the relationship should be declared, please consult the Deputy Secretaries for advice. It is the individual’s responsibility to keep their declarations up-to-date, eg as their circumstances change.

  2.B. Action to be taken by a line manager when a financial relationship is declared

  If a relationship has been declared, it is the line manager’s responsibility to:

  • confirm whether the relationship needs to be disclosed to the Bank (see above);
  • assess the nature of the risk that might arise from this relationship;
  • consider whether any mitigants need to be put in place; and
  • if mitigants are needed, put them in place.

  This risk assessment and any mitigant should be agreed with a HoD (or above) and can be recorded in the text box provided in the Our Code Compliance system, or a link to the relevant Filesite document can be included.

  Specific mitigants are unlikely to be needed for many of the financial relationships that are declared. This is because the personal financial transactions (PFT) policy acts as a Bank-wide mitigant for the majority of them. The PFT policy requires staff to seek approval if they wish to change the nature of most of these relationships – PFT requests are screened in Secretary’s Department and considered by the individual’s Local Reporting Officer (LRO) for sensitivities. For example:

  • Significant movements (above £5,000) out of accounts above the FSCS limit to another account/NS&I need advance approval under the PFT policy. Approval must also be sought for any transaction that could be deemed sensitive because the individual knows something about the firm from their role at the Bank that is not in the public domain (such as advanced contingency planning, an adverse stress test result, a breach of regulatory requirements, an intervention by the Bank with respect to that firm etc).
  • Individuals are permitted to retain pre-existing direct shareholdings in Bank regulated firms or their financial holding companies, but may not acquire more, and must seek approval before disposing of any of these holdings. An appropriate mitigant for some roles may be that disposal of such shares will not be permitted (for example while working in the relevant Supervisory team).
  • For ‘with-profits’ policies, it may be necessary to set a mitigant, such as that an individual must hold the policy to maturity if they are working in an area where they would have regular access to confidential information relating to the firm concerned (such as in Insurance Supervision).

January 2024