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Investigator rejects claims made by Bank boss around investment firm’s collapse

August Graham, PA City Reporter
·2-min read

The investigator who released a report which was highly critical of the Financial Conduct Authority has said she rejects evidence its former boss gave to MPs on Monday.

Dame Elizabeth Gloster said that she disagreed with statements from Andrew Bailey, who has been Bank of England governor since last year, and released extracts of a letter from his lawyer.

The former FCA chief executive had told the Treasury select committee on Monday that he was angry about some of the contents of Dame Elizabeth’s report into the collapse of London Capital and Finance.

The report had found that the FCA did not effectively supervise or regulate LCF during a time when Mr Bailey was in charge.

The investment firm’s collapse trapped £239 million belonging to small savers.

Mr Bailey said that there had been a “fundamental misunderstanding” over whether he had asked for references to his personal culpability in the LCF saga to be removed from Dame Elizabeth’s report.

But the former Court of Appeal judge said she rejected this assertion.

Extracts of a letter she had been sent by Mr Bailey’s lawyer showed she had been asked to “delete the reference to ‘responsibility’ resting with specific identified/identifiable individuals, whether the executive directors of supervision or Mr Bailey”.

The letter added that “no benefit arises (and the draft report’s findings and conclusions are not strengthened) by the attribution of responsibility to particular individuals – whether Mr Bailey or the executive directors of supervision”.

The letter also invited the investigators to “bear in mind that the attribution of responsibility to [Mr Bailey] is likely to have the consequence of his being singled out for blame once the final report is published”.

In a letter to the Treasury committee, Dame Elizabeth said: “To the extent that Mr Bailey’s evidence was that his representations to me were limited to requesting a distinction between personal culpability and responsibility (which was my understanding of his evidence today), I must disagree.

“I also reject his suggestion that there has been a ‘fundamental misunderstanding’ on this issue.

“As will be clear from the extract from Mr Bailey’s representations enclosed with this letter, Mr Bailey’s primary position in those representations was that references to him (or any other individual) having personal responsibility for the FCA’s regulation of LCF should be deleted.”