Fund collapse showed ‘buck stops nowhere’ at UK watchdog, say lawmakers
24 Jun 2021

The collapse of London Capital & Finance showed how Britain’s Financial Conduct Authority appeared unable to meet standards of accountability it imposes on firms it regulates, a parliamentary report said on Thursday.

The report from the Treasury Select Committee said the FCA put an “over-reliance” on its collective responsibility for the investment firm’s failure in early 2019, rather than on accountability of senior officials at the regulator.

The FCA requires senior managers at regulated firms to be directly accountable for their actions to make it easier to punish individuals, a landmark reform that came out of the financial crisis.

“The FCA Board should reflect on whether it has, in this case, met the standards which it seeks to impose upon others. We believe that there are doubts as to whether it has,” the report said.

LCF left 11,625 investors facing losses of up to 237 million pounds ($331.52 million) on the mini-bonds they bought. It was licensed by the FCA but the mini-bonds were unregulated, making investors ineligible under the UK’s financial compensation scheme.

In a rare move, the government will pay investors about 120 million pounds in compensation for what the report called “one of the largest conduct regulatory failures of the last three decades”.

By Huw Jones, Reuters, 24 June 2021

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