Regulation  

FCA staff will not be forced to cooperate with review

FCA staff will not be forced to cooperate with review

The leader of the independent investigation into the Financial Conduct Authority's handling of a collapsed mini-bond provider will not be able to force the regulator's employees to meet with her, it has emerged today.

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

Shortly before LCF's collapse the Financial Conduct Authority ordered the firm to stop marketing its fixed-rate investment bonds and Isa products and the provider had its assets frozen by the regulator.

In April it was announced an independent investigation would review the FCA's handling of the firm's supervision and failure, with Dame Elizabeth Gloster heading up the process. 

The former judge said she was keen to hear from as many of those affected as possible and encouraged anyone who "wants to engage in the investigation" to get in touch. 

But a protocol released alongside the statement showed employees at the regulator will not be obliged to meet with Dame Elizabeth as part of the investigation.

The FCA said: "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 compulsory under statutory powers."

The regulator said once Dame Elizabeth had a full team in place she would be in touch with bondholders to discuss the investigation.

In a separate update published by the FCA today (July 25) Dame Elizabeth said: "Many people have been badly affected by the failure of London Capital & Finance.

"There is rightly a great deal of interest in what happened at LC&F and the role of the FCA."

A total of 26 MPs have called for Mr Bailey to resign from his position at the FCA for his part in the LCF collapse, which they claim saw him "preside over the biggest financial scandal in recent years". 

The early day motion which called for his resignation expressed "alarm" over concerns the regulator did not act quickly enough to identify and act upon problems in the firm.

Earlier this month the FCA announced the bonus paid to its chief executive Andrew Bailey would depend on the outcome of the investigation into its handling of the LC&F collapse, with 60 per cent, £40,800, deferred until March 2020.

rachel.addison@ft.com 

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