City regulator jeered by scandal victims
Financial Conduct Authority boss Andrew Bailey has faced a string of financial collapses in recent months.
The head of the City regulator was jeered at a public meeting following a spate of high-profile collapses that have tarnished the body’s reputation.
Angry small-scale investors shouted “stop protecting the crooks” and “run away slimy” as Bailey and his chairman, Charles Randell tried to wrap up the two-hour meeting attended by around 350 people.
The FCA has been rocked by several financial collapses in recent months that have hit small investors, such as the demise of peer-to-peer lender Lendy in May, which fell into administration with £160m in outstanding loans and with more than £90m in default.
String of failures
Also, the watchdog handling of investment firm London Capital & Finance (LCF), which collapsed in January, is being independently reviewed. LCF sold high-risk mini-bonds, despite advertising its product as a low-risk individual savings allowance, its failure left around 11,500 small investors facing as much as £236m of losses.
Small businesses and investors were also angry at the watchdog’s handling of the June suspension of star asset manager Neil Woodford’s £3.5bn flagship fund, and the Royal Bank of Scotland’s now-defunct Global Restructuring Group, which is accused of seizing the assets of struggling small businesses between 2008 and 2013.
Bailey, who is a frontrunner to replace Bank of England governor Mark Carney in January, told the meeting it was difficult to track firms that exist on the “perimeter” of financial regulation.
He said: “Technology is an important part of this. Innovation offers huge opportunities for consumer good . . . But it can also be an enabler of new forms of harm. We often see examples of this taking place today at the blurry edges of the regulatory boundary – where grey areas create opportunities for bad actors.”
Bailey added: “The question of what sits inside and outside this boundary – also known as the regulatory perimeter – is a matter of great importance for consumers and firms alike. It matters because it determines where consumers are protected, and where they aren’t; when we can take action, and when we can’t.”
‘Built on a lie’
Bank of England Governor Mark Carney said last month that open-ended funds like Woodford were “built on a lie” by saying they can hand investors their money back on a daily basis.
However, at a news conference after the FCA’s stormy meeting, Bailey said: “I don’t share the view that open-ended funds are per se bad. I do think that the Woodford case . . . tells us a number of things about how you have to manage illiquid assets.”
He added: “We don’t have evidence to suggest that there are other firms acting in the way that Woodford did.”