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BoE's Bailey challenged over his testimony on collapsed fund LCF

·2-min read
FILE PHOTO: Bank of England Governor Andrew Bailey poses for a photograph on the first day of his new role at the Central Bank in London

LONDON (Reuters) - Bank of England Governor Andrew Bailey was challenged by a former judge on Tuesday over statements he made to parliament about a request to delete his name from a damning report on the collapse of London Capital & Finance, an investment fund.

On Monday, Bailey angrily denied he had asked the report's author, former Court of Appeal judge Elizabeth Gloster, to remove his name when apportioning responsibility for the collapse of a fund that left over 11,000 investors with losses of up to 237 million pounds ($326.92 million).

Bailey, who had been chief executive of LCF's regulator at the time of the collapse, said he was against named individuals being made personally culpable, although he accepted general responsibility for the fund's demise.

But Gloster said she disagreed with Bailey's explanation.

"I ... reject his suggestion that there has been a 'fundamental misunderstanding' on this issue," Gloster said in a letter to the chair of the parliamentary committee addressed by Bailey, which was made public on Tuesday.

Bailey's "primary position" in his representations was that references to him or other individuals having personal responsibility for the FCA’s regulation of LCF should be deleted, she said.

"The distinction between personal culpability and responsibility was merely one argument in support of that position," Gloster said.

Bailey had told the Treasury Committee on Monday that there had been a "fundamental understanding" of the issue.

"It's not correct to present the points I made in my representations as in any sense an unconditional statement that I did not want my name mentioned, particularly mentioned in the context of responsibility. That is just not the case."

A BoE spokesman, asked about Gloster's letter, said Bailey's legal representations had been made about her draft report which had not been clear on the distinction between personal culpability or blame, and responsibility.

"If that had been made clear in the draft report, the Governor would not have needed to make the representations," the spokesman said.

"As the Governor said yesterday, Dame Elizabeth and he disagree on points of process and some of her conclusions but he fully respects her independence and does not propose to comment further."

($1 = 0.7250 pounds)

(Reporting by Huw Jones; editing by Andy Bruce, William Schomberg and Mark Heinrich)