LONDON (Reuters) – Bank of England chief Andrew Bailey angrily hit back at criticism that he failed to overhaul a regulator quickly enough to avert the collapse of the London Capital & Finance fund, saying the regulator had been a “broken machine.”
Bailey was chief executive of the Financial Conduct Authority when LCF collapsed in January 2019 leaving more than 11,000 investors with losses of up to 237 million pounds ($325.6 million).
An independent report last year said Bailey and the FCA’s executive committee were responsible for deficiencies that led to LCF’s collapse.
Last week, the author of the report, former Court of Appeal judge Elizabeth Gloster, told parliament’s Treasury Committee that being unable to complete internal reforms was no excuse for the LCF debacle.
Bailey, who last year apologised to LCF investors for not reforming the FCA quickly enough, told the committee on Monday that he “fundamentally disagreed” with Gloster’s view, adding that she had said the FCA at the time was a “broken machine”.
“She sort of suggested to you that if only we had told the staff to pull their socks up, the problem would have gone away,” Bailey told lawmakers.
“She even at one point in the report suggested that maybe it was a mistake to do the programmes of change, which I just fundamentally disagree with,” Bailey said.
There had been no mechanism for extracting concerns raised by investors about LCF from among 200,000 calls a year received from the public, Bailey said.
He also took issue with a claim by Gloster that he and two other FCA executive committee members at the time had asked her not to name them in relation to the report’s conclusions.
“I am probably sounding quite angry now, and I am,” he said.
($1 = 0.7280 pounds)
(Writing by Huw Jones; Editing by William Schomberg)
