The independent directors responsible for governance at the Bank of England have backed former Financial Conduct Authority (FCA) chief Andrew Bailey over his role in the London Capital & Finance (LCF) collapse.
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.
During a meeting of the Bank of England’s court of directors on 11 December, the court “expressed full support” for Bailey (pictured) ahead of him joining the Bank of England as governor.
The chair advised the court that Dame Elizabeth Gloster’s report on the FCA’s involvement with LCF would be published during the following week.
“Court acknowledged Andrew Bailey’s outstanding performance since taking over as Bank governor at a moment of national crisis, and expressed full support for him in that role,” the minutes said.
Gloster’s LCF report criticised the FCA for its “significant gaps and weaknesses” under Bailey’s leadership and said 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 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.
The following week, Bailey defended his apology and role in the mini-bond provider’s collapse.
He told the committee 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.