Former Financial Conduct Authority (FCA) chief Andrew Bailey has defended his apology for the regulator’s failure in the collapse of London Capital & Finance (LCF).
Speaking to the Treasury select committee of MPs on Monday, Bailey said that the regulator inherited a contact centre that receives about 200,000 calls a year, which had complaints pointing to suspected fraud at LCF, but this was missed because there was no system for extracting information out of the contact centre calls to act upon.
He said the huge programme the FCA undertook to improve its supervision and authorisation was essential and included reforming its call centres.
During his four-year tenure as head of City watchdog, mini-bond provider LCF went into administration, resulting in thousands of everyday investors losing their money.
Bailey (pictured) apologised to LCF bondholders after an independent review into the scandal found “significant gaps and weaknesses” at the FCA under his leadership.
Last week, Dame Elizabeth Gloster, who lead the review, told the Treasury select committee 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.
Bailey, who became governor of the Bank of England in March 2020, told the Treasury select committee that as chief executive he was responsible for everything that happened at the FCA and defended his apology to LCF bondholders as well as the need for this reform programme.
“I didn’t know about LCF as a firm until pretty much the point at which it was closed down by the FCA so my personal involvement didn’t begin until then,” he told MPs.
“There’s a lot of lessons for all of us. I was disturbed the nature of my apology would be taken to suggest there would be no lessons… I think throughout this report we’ve had this struggle between those of us saying ‘please can we explain to you this situation we inherited and what it took to solve this’.
“I agree with Dame (Elizabeth) on a lot of points, but she sort of suggested if only we told the staff to pull their socks up the problem would have gone away and she at one point suggested maybe there was a mistake to do the programme of change, which I fundamentally disagree with.
“I’m not hiding things that went wrong…The red flags were buried within the 200,000 calls and I wish there were a mechanism for extracting the information and we set to work as one of the big deliverables in this to do just that.”