UK lawmaker asks BoE to review code of conduct for rate-setters

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LONDON, Aug 24 (Reuters) - The Bank of England must review its code of conduct for monetary policymakers after a recent appointment raised questions about a possible conflict of interest, the chairman of an influential committee of British lawmakers said on Monday.

Incoming Monetary Policy Committee (MPC (KOSDAQ: 050540.KQ - news) ) member Gertjan Vlieghe last month severed all links with his previous employer, one of the world's biggest hedge funds, to avoid "any mistaken impression" of a conflict of interest.

The move only occurred after questions were raised about Vlieghe's ties to the firm.

In a letter to BoE Governor Mark Carney, Treasury Committee chair Andrew Tyrie said this suggested the code of conduct would "benefit from re-examination".

"It (Other OTC: ITGL - news) is essential that those appointed to the MPC have no conflicts of interest, nor perception of them," said Tyrie.

A BoE spokeswoman said the bank had received Tyrie's letter and that it would respond in due course.

Vlieghe had originally been cleared to stay part of a long-term incentive plan at hedge fund Brevan Howard, where he was a partner, after he joins the MPC on Sept. 1.

The arrangement would have provided him with payments based on how much money was managed by the fund. Its traders make bets on the impact of central bank decisions.

The BoE's code of conduct, dated May 2015, says MPC members must not retain any directorship, trusteeship, advisory post or other interests -- whether or not they are remunerated -- which could be seen to be in conflict with MPC membership.

It also says it is the responsibility of Britain's finance minister to decide whether any interest is compatible with MPC membership, and that the BoE's governor may offer advice.

When it first announced Vlieghe's appointment last month, the finance ministry said that Vlieghe's stake in Brevan Howard did not pose a conflict of interest.

But this caused surprise in financial circles and drew attention from Tyrie's parliamentary committee.

The finance ministry was not able to comment immediately. (Reporting by Andy Bruce, editing by William Schomberg and Gareth Jones)