BoE boss Andrew Bailey denies responsibility for London Capital & Finance collapse
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Bank of England boss Andrew Bailey has hit out at allegations that he was not quick enough to reform the Financial Conduct Authority (FCA) before the collapse of London Capital & Finance (LCF).
Bailey, who was chief executive of the FCA when the mini-bond firm collapsed in 2019, said the regulator had been a “broken machine”.
LCF’s collapse left more than 11,000 investors with losses of up to £237m ($325.6m).
An independent report last year said Bailey and the FCA’s executive committee were responsible for deficiencies that led to LCF’s collapse.
Last week, the author of the report, former Court of Appeal judge Elizabeth Gloster, told parliament’s Treasury Committee that being unable to complete internal reforms was no excuse for the LCF debacle.
Bailey told Westminster’s Tresaury Committee today that he “fundamentally disagreed” with Gloster’s findings.
“She sort of suggested to you that if only we had told the staff to pull their socks up, the problem would have gone away,” he said.
“She even at one point in the report suggested that maybe it was a mistake to do the programmes of change, which I just fundamentally disagree with.”
Probe into FCA’s handling
The government launched an investigation into the FCA’s handling of the case in the spring of last year.
The report said there were “significant gaps and weaknesses” in the FCA’s policies and practices and that the mini-bondholders “were entitled to expect, and receive, more protection from the regulatory regime in relation to an FCA-authorised firm (such as LCF) than that which, in fact, was delivered by the FCA”.
LCF sold risky and unregulated mini-bonds offering big returns, but falsely told people they were fixed rate individual savings accounts.
Their collapse meant that hundreds of million of pounds were lost for investors when the fund went bust in January 2019.