Treasury committee to grill FCA on minibond probe delay

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Treasury committee to grill FCA on minibond probe delay

The chairman of the Treasury committee has voiced concerns over the delay of the investigation into the Financial Conduct Authority’s handling of the London Capital and Finance scandal and will question the regulator in its next evidence session.

Mel Stride, chair of the Treasury Committee, called the two-month delay of the investigation, announced today (June 2) “concerning” and reiterated the committee wants the report published as soon as possible.

Mr Stride said: “The previous Treasury committee pressed the need for an investigation into events at LCF.

“When the Treasury rightly used its powers to direct the FCA to commission a review last year, my predecessor urged the regulator and the Treasury to ensure that the investigation was conducted and report published as soon as possible.

“The delay in the investigation is particularly concerning. As Dame Elizabeth has said, the decision to delay may cause anguish to those who invested in LCF.”

He added: “We will want to get to the bottom of what role the FCA had in the delay when we next take evidence from them.”

Mr Stride’s comments come after Dame Elizabeth Gloster, the High Court judge leading the investigation, announced the target date for completion of the independent investigation has been delayed to September 30, 2020 due to the coronavirus pandemic impacting the timetable for interviews with FCA employees.

There have previously been delays in receiving documents and information from the FCA, which again impacted the investigation team’s timetable to interview FCA employees. 

At the time the intention had been to still complete the work within the original timeframe, reporting by July 10, 2020, but this has now been changed.

The economic secretary to the Treasury had directed the FCA to carry out an independent investigation into the circumstances surrounding the collapse of LCF in May 2019. 

The investigation will consider the FCA’s actions, policies and approach when regulating LCF. 

For example, it will focus on whether the regulator adequately supervised LCF’s compliance with its rules and policies and if it established appropriate policies for responding to information provided by third parties regarding the conduct of LCF.

It will also look into whether the FCA received information of significance concerning the conduct of LCF and if it responded appropriately.

LCF entered into administration in January 2019 owing more than £230m and putting the funds of some 14,000 bondholders at risk.

The firm allegedly signed clients up to fixed-rate Isas promising 8 per cent interest, with investors' capital then invested into mini-bonds used to issue loans to small businesses.

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