Governance & Accountability
The current governance and accountability framework is set by the 1998 Bank of England Act, which provides for a Court of Directors, a Committee of Non-executive Directors within Court, and a Monetary Policy Committee.
The Court of Directors
Court consists of the Governor, two Deputy Governors and 16 Directors. The Directors are all non-executive. The Governors are appointed by the Crown for five years and the Directors for three years.
Under the Act, the responsibilities of Court are to manage the Bank’s affairs, other than the formulation of monetary policy, which is the responsibility of the Monetary Policy Committee. Court’s responsibilities include determining the Bank’s objectives and strategy, and ensuring the effective discharge of the Bank’s functions and the most efficient use of the Bank’s resources.
Members of Court have been indemnified by the Bank against personal civil liability arising out of the carrying out or purported carrying out of their functions, provided they have acted honestly and in good faith and have not acted recklessly. These indemnities were granted in 2000 and approved by HM Treasury in accordance with the practice of the Government in relation to board members of Non-Departmental Public Bodies.
The Monetary Policy Committee (MPC)
The Bank of England Act establishes the MPC as a Committee of the Bank, subject to the oversight of NedCo, and sets a framework for its operations. Under the Act, the Bank’s objectives in relation to monetary policy are to maintain price stability and, subject to that, to support the Government’s economic policies, including its objectives for growth and employment. At least once a year, the Government specifies the price stability target and its growth and employment objectives. The MPC must meet at least monthly; its members comprise the Governor and Deputy Governors, two of the Bank’s Executive Directors and four members appointed by the Chancellor. In June 2008 the Chancellor of the Exchequer announced that the Government will advertise future vacancies for the Governor and Deputy Governors of the Bank of England and also for external members of the MPC. At the same time the Bank of England announced that it intends to advertise externally the executive appointments to the MPC that are its responsibility — Executive Director for Monetary Analysis and Statistics and Executive Director, Markets — when they become vacant in future.
NedCo
The Act provides for a Committee of Court (‘NedCo’) consisting of all the Non-executive Directors, with a chairman designated by the Chancellor of the Exchequer. The chairman of NedCo is also Deputy Chairman of Court. NedCo has responsibilities for reviewing the Bank’s performance in relation to its objectives and strategy, and monitoring the extent to which the Bank’s financial management objectives are met. NedCo is also responsible for reviewing the procedures of the MPC, and in particular whether the Committee has collected the regional, sectoral and other information necessary for formulating monetary policy. Other functions of NedCo — in which it is supported by the Audit and Remuneration Committees — include reviewing the Bank’s internal controls and determining the Governor’s and Deputy Governors’ remuneration and the terms and conditions of the service of the four members of the MPC appointed by the Chancellor. NedCo is required to make a report as part of the Bank’s Annual Report.
Since 2004 the normal practice has been for the business of Court to be discussed in meetings of NedCo, with the Executive present. Formal decisions are then taken in Court. NedCo also holds meetings from time to time without the Executive, so that it can fulfil its reviewing role.
Audit Committee
The functions of the Audit Committee are to:
- Assist Court in meeting its responsibilities for an effective system of financial reporting, internal control and risk management.
- Receive reports from, and review the work of, the internal and external auditors. The Committee also considers and makes recommendations on the appointment of the external auditors, their independence and their fees.
- Review the annual financial statements prior to their submission to Court, including consideration of the appropriateness of the accounting policies and procedures adopted. The Committee reports its conclusions to Court.
The Committee normally meets four times a year.
Management structure
The executive management of the Bank lies with the Governors and Executive Directors.
The Bank's management structure, heads of function and the responsibilities of each area are described in more detail under Structure of the Bank area of the website.
