HMRC has established an Isa-focused working group with the Financial Conduct Authority and Treasury in response to the mini-bond scandal.
Last month (April 11) FCA chairman Charles Randell wrote to the economic secretary to the Treasury, John Glen MP, outlining the steps that have been taken by the regulator in response to independent reviews into the collapse of London Capital & Finance (LCF).
Part of the improvements include the creation of a working group made up of representatives from HMRC, the Treasury and the FCA in order to improve intelligence sharing between the organisations.
Randell confirmed that since the group’s creation, 30 firms have been removed from HMRC’s Isa manager register due to ineligibility.
The update from the FCA came in response to recommendations made by Dame Elizabeth Gloster after a review of the collapse of LCF, a mini-bond provider.
In the review, the watchdog was criticised for "significant gaps and weaknesses" in its policies and practices, and that its handling of information from third parties regarding LCF was "wholly deficient".
The report said it was an "egregious example" of the FCA’s failure to fulfil its statutory objectives in regulating LCF.
Gloster’s report recommended that the Treasury consider addressing the “lacuna” in the allocation of Isa-related responsibilities between the FCA and HMRC.
It outlined how the fact that LCF’s bonds could be acquired in an Isa wrapper was crucial in attracting investment.
HMRC approves Isa managers, a role which is not a regulated so the FCA does not have any power over these managers, but does not scrutinise whether individual products offered by the managers comply with regulation.
Other actions from the city watchdog in response to Gloster’s review include a new ‘repeat breacher’ policy that includes more proactive monitoring of financial promotions, as well as updating the criteria and thresholds on its warning list to alert customers to potential action and fraud.