Financial Conduct Authority  

MPs rebuke 'litany of failings' at FCA

MPs rebuke 'litany of failings' at FCA

MPs have rebuked a "litany of failings" at the Financial Conduct Authority and promised further action following a damning report into the regulator's part in a high-profile mini-bond collapse. 

The Treasury Committee said it had plans to take further oval evidence on the findings of an independent investigation into the City watchdog's part in the London Capital & Finance scandal. 

It follows a report by Dame Elizabeth Gloster published yesterday which warned the FCA had "significant gaps and weaknesses" in its policies and practices.

The investigation also found the regulator could have done more to protect investors in London Capital & Finance and its handling of information from third parties regarding the business was "wholly deficient".

Mel Stride, chairman of the Treasury committee, said the report exposed a "litany of failings" at the FCA. 

He added: "We will look at the detail of this important report thoroughly and the committee plans to take oral evidence on it, as well as on any wider implications for the regulatory regime, in the new year.

"We must now see what lessons can be learnt to prevent history from repeating itself, and to ensure that we have a proactive regulator." 

HM Treasury first requested the independent investigation in May 2019 after the mini-bond provider collapsed owing more than £230m and putting the funds of some 14,000 bondholders at risk.

Following Dame Elizabeth's report the Treasury confirmed the government would set up a scheme to assess whether there is justification for further one-off compensation payments for investors.

Mr Stride added: "It is imperative that the compensation scheme announced by the Economic Secretary delivers swiftly to LCF bondholders." 

The report was published alongside another independent investigation into the FCA, which probed its role in the collapse of the scandal-embroiled Connaught fund. 

Lead by Raj Parker, the Connaught investigation also found the City watchdog's regulation of the fund was "not appropriate or effective" and it could have done more to protect consumers. 

Sober reading

Adviser trade body Pimfa said the London Capital & Finance report made for "sober reading" for all parties. 

Tim Fassam, director of government relations and policy at Pimfa, the trade association for the wealth management and financial advice industry, said: "Chief among this we have to remember those LCF policy holders who ultimately have been failed by an organisation they trusted with their savings and a regulator whom they trusted to undertake its statutory duties.

"Lessons need to be learned and recommendations acted upon to ensure that future failings like this do not occur.

"It is to the FCA’s credit that they have recognised the seriousness of these reports and committed to acting on all relevant recommendations."

On Thursday the regulator said it was "profoundly sorry" for its failings, with chairman Charles Randell admitting there were a "number of things" the FCA could have done better in its supervision of the mini-bond provider.

"Chronicle of red flags missed"