The author of a review into the London Capital & Finance (LCF) collapse has blasted former Financial Conduct Authority (FCA) chief executive Andrew Bailey’s apology as inadequate.
During his four-year tenure as chief executive of the City watchdog, Bailey (pictured) was in charge when mini-bond provider LCF went into administration in January 2019.
Dame Elizabeth Gloster, the former Court of Appeal judge, released her LCF review in December 2020.
It found “significant gaps and weaknesses” at the FCA under Bailey’s leadership and that the regulator did not effectively supervise and regulate the mini-bond provider.
Bailey and the FCA apologised but Gloster told the Treasury select committee this week that his apology did not address the regulator’s failure to intervene before it was too late and the problems he inherited did not excuse or mitigate the FCA’s failure to regulate LCF.
“I don’t think [the apology] really addresses the problem because the [FCA] problems were not so fundamental they could not be fixed,” she said.
“It is not an adequate reason or excuse.”
In December, the FCA said it accepted all of Gloster’s recommendations aimed at the regulator and revealed its nine lessons learnt from the LCF collapse.
In March last year when approving Bailey’s appointment as governor of the Bank of England, the Treasury committee criticised the FCA and said it needed to improve.
It comes after Bailey defended his tenure as FCA chief to the select committee, saying that the regulator improved during his time and that its focus changed in recent years, moving from scrutiny of the conduct of big firms to wider market oversight.
LCF administrators are still working to recover any outstanding claims.
Of the £237m believed to be owed to investors when the firm collapsed, just over £50m has been recovered to date.