Financial Conduct Authority  

FCA will not be forced to help with Connaught review

FCA will not be forced to help with Connaught review

Financial Conduct Authority employees will not be forced to meet with the leader of an independent review into the regulator's handling of the Connaught fund collapse, in terms similar to the review of London Capital & Finance.

In June the FCA commissioned barrister Raj Parker to lead an independent review into its own actions and those of its predecessor the Financial Services Authority in dealing with the Connaught Income Fund Series 1 and its operators between February 2007 and March 2015. 

The fund was an unregulated collective investment scheme run by operators Capita Financial Managers and Blue Gate Capital from March 2008, providing short term bridging finance to commercial operators in the UK property market.

The fund went into liquidation in December 2012, with investors losing £118m in three versions of the Connaught funds when they collapsed

The independent review is expected to assess the "proportionality, appropriateness and effectiveness" of the FCA and FSA's regulation, but it emerged yesterday (August 14) that staff at the watchdog would not be obligated to meet with Mr Parker in his investigations. 

The regulator said in a document published on its website: "The FCA will endeavour to secure the attendance at a meeting of any identified individuals who are current or former employees of the FCA.

"It should be noted, however, that attendance by an individual at a meeting with you is not required under statutory powers."

A similar stance applies to the independent investigation into the FCA's handling of collapsed mini-bond provider London Capital & Finance, with Dame Elizabeth Gloster, leader of the review, unable to force employees to meet with her. 

In yesterday's update the FCA also clarified some parts of the final Connaught review may be redacted in the interests of legal privilege and confidentiality, with Mr Parker unable to name any personnel who were below the level of director at the FCA at the time of their actions. 

The Complaints Commissioner first recommended the Connaught review in December 2016, with the FCA pointing last year to ongoing investigations into the Connaught fund as the cause of its long delay. 

The review will also address whether the FSA effectively managed any potential conflicts of interests within the regulator and assess its interaction with whistleblowers at the time and any action taken as a result. 

rachel.mortimer@ft.com 

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