Former chairman of the Financial Conduct Authority, Andrew Bailey, resented criticism that the regulator could not prevent the collapse of minibond firm London Capital & Finance, saying there were no simple solutions that could have prevented the collapse .
Bailey also said he inherited a “broken machine” in the FCA.
“I probably sound pretty angry now because I am,” Bailey told the Finance Committee on February 8th.
Speaking to the influential committee, the former FCA chief said he “fundamentally disagrees” with the notion that failure to complete internal reforms is no excuse for failing to prevent LCF from collapsing in 2019.
Investors lost around £ 237 million by buying 16,700 bonds, the FCA said on January 9, 2021.
Bailey’s appearance follows an independent report by Dame Elizabeth Gloster on the company’s demise, which criticized the FCA’s handling of the company’s collapse.
Bailey, who is now governor of the Bank of England after stepping down from the FCA last year, said one of the problems was that “we haven’t inherited a system for extracting information from the contact center.” Gloster had identified over 600 calls that had been made to the regulator to report suspected fraud related to LCF – and which had not been responded to.
READ Andrew Bailey criticized the failure of the FCA over the collapse of the LCF
The center receives over 200,000 calls a year, Bailey told the committee. He said he did not find out about these calls until the material for Gloster’s report was being prepared.
The report uncovered “serious flaws” in regulating the company, including the watchdog, which did not respond to specific and detailed allegations by third parties.
READ MEPs are calling for a parliamentary debate on the FCA’s failures
“I think it’s a question to ponder – not by me, but by the FCA Chairman and CEO and the Treasury Department as far as the Bank of England is concerned – what they think is appropriate given the serious criticism and conclusions I’ve done, ”Gloster told the Finance Committee on February 1.
Bailey apologized to bondholders following the publication of Gloster’s report, stating that despite a “comprehensive corporate oversight reform program” under his supervision, he was “sorry that these changes did not occur in a timely manner”.
READ Andrew Bailey faces the MP cricket over the liquidation of London Capital & Finance
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