Bank of England governor Andrew Bailey was chief executive of the FCA at the time of the London Capital and Finance scandal
The author of a damning report into the City watchdog’s handling of the London Capital and Finance (LCF) savings scandal has blasted Andrew Bailey’s apology to victims.
Dame Elizabeth Gloster, a former judge, told the Treasury select committee that the Bank of England governor’s apology issued in December was ‘inadequate’ and ‘didn’t really address the problem’.
She added that the Financial Conduct Authority (FCA) and the Treasury must consider what action to take against Bailey – who was then chief executive of the FCA – and two other officials named in her report.
Gloster was commissioned to complete a review into how the FCA dealt with LCF in the run-up to its collapse in January 2019.
Savers who had bought so-called mini-bonds from LCF were left facing losses of up to £237million when the firm collapsed, amid accusations that the FCA had failed to act on repeated warnings.
Her report held several senior members of the watchdog – including Bailey – responsible for a number failings. Bailey, who took up the top job at the Bank of England last year, was forced into an apology.
He said that he had initiated a reform of the FCA, and added: ‘I am sorry those changes did not come in time for LCF bondholders.’
But the chairman of the Treasury select committee, Conservative MP Mel Stride, asked Gloster in a hearing yesterday: ‘Shouldn’t [Bailey] have been apologising that this all happened in the first place on his watch?
‘Most of these mistakes should have been picked up and dealt with at the time, and under his watch he failed to do that.’
Gloster said: ‘My report is clear that the issues which he inherited didn’t excuse or mitigate the FCA’s overall failure to regulate LCF during the period of his guardianship.’
Addressing his apology, she said: ‘I don’t think it really addresses the problem because the problems which were there weren’t so fundamental that they couldn’t, in my view, have been fixed by specific focused changes.
‘It’s not an adequate reason or excuse to say, ‘If LCF had only happened a bit later all the changes we put in place would have stopped it from happening’. These were defects which we didn’t think were being picked up.’
Gloster said it was not her place to decide what reprimands should be handed out to the executives named in her report. But she added: ‘I do think it’s a matter to which consideration should be given.’
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