Financial Conduct Authority  

Connaught FCA review gets underway

Connaught FCA review gets underway

The long-awaited investigation into the regulator’s oversight of the collapsed Connaught Income Fund Series 1 is now officially “up and running”, the City-watchdog has said.

The fund, which was an unregulated collective investment scheme, provided short-term bridging finance to commercial operations but went into liquidation in December 2012, with investors losing £118m.

Today (September 27) the Financial Conduct Authority published an update in which Raj Parker, the appointed barrister for the independent review, said the “investigation into the approach to, implementation and oversight” of the fund was now “up and running”.

He also invited any affected individuals to get in touch with the investigation by emailing

The FCA appointed Mr Parker in June to lead the independent review into its own actions and those of its predecessor, the Financial Services Authority, in dealing with the fund and its operators between February 2007 and March 2015.

Mr Parker added: “As part of this independent review, I will be investigating the regulators’ approach to and response to intelligence, as well as the FCA’s involvement in the mediated negotiations before the launch of enforcement investigations in March 2015. 

“I will also look at whether the regulator’s jurisdiction at the time impacted its ability to protect consumers and whether its approach to communications with investors in the fund was appropriate, timely and transparent.”

The review will consider the “proportionality, appropriateness and effectiveness” of their regulation when supervising the scheme’s operators Tiuta International, Capita Financial Managers and Blue Gate Capital.

The FCA previously found there were "serious issues" which arose during the tenure of Capita as an operator of the Connaught Income Fund Series 1 and that Capita failed to ensure its replacement was fully informed about these.

In March 2015 the regulator decided to investigate the activities of Capita and Blue Gate in connection with their roles as operators.

In 2017 the FCA concluded Capita should pay up to £66m to those investors who suffered a loss after investing in the Connaught Income Fund Series 1, with the first instalment of £51m paid to the regulator in April last year and a further £15m ring-fenced in a separate escrow account. 

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

At the time the complaints commissioner, Antony Townsend, found the FCA had “shifted the focus” away from its regulatory failings onto independent financial advisers.

One complainant accused the regulator of covering up regulatory failings by directing the Financial Ombudsman Service to automatically uphold all relevant complaints against IFAs.

Last month (August 15) it emerged FCA employees would not be forced to meet with the leader of the review, in terms similar to the review of collapsed mini-bond firm London Capital & Finance.

In both cases he regulator released a notice which said the “attendance by an individual at a meeting with [the leader of the review] was not required under statutory powers”.