Bank of England governor Andrew Bailey said on Monday that he has apologised to investors caught up in a financial mis-selling scandal during his time heading up the Financial Conduct Authority.
Mr Bailey has come under fire in recent weeks for his links to two separate financial scandals, including failing to protect 11,000 savers who lost money in the £238 million ($331m) London Capital & Financial collapse during his time as head of the FCA from 2016 to 2020.
“I've apologised to the investors in LCF, for what happened, it should never have happened,” he said on Monday in an interview with the BBC.
“When I was asked to become chief executive of the FCA by the then chancellor, it was in the context of recognising that there were a lot of problems to sort out. Those problems really had their origin with the FCA taking on responsibility for regulating consumer credit ... we had a lot of issues to deal with and work to do.”
At a time when Britain’s economy is struggling to recover from the worst economic shock in 300 years, the BoE chief has also faced criticism for failing to declare a potential conflict of interest in a Royal Bank of Scotland scandal that saw thousands of customers financially ruined.
RBS, which is now called NatWest, was accused of putting its own interests first when it transferred 16,000 small and medium-sized business customers to its Global Restructuring Group (GRG) – a move that later saw the majority of those customers either mistreated or suffering financial ruin between 2009 and 2013.
In a former role, Mr Bailey helped to design the framework for the Asset Protection Agency for the Treasury, a body that oversaw the RBS division and allegedly helped to drive GRG's aggressive behaviour by forcing the bank to foreclose on customers and seize their assets.
While Mr Bailey was asked about the GRG scandal when he was vetted for conflicts of interest ahead of being made head of the regulatory body, the FCA, he has now been accused of failing to mention his role in more recent hearings on the scandal.
“That Bailey failed to declare his interest and involvement in the agency when it featured in the FCA report as a potential cause of the scandal or to [MPs] when questioned about it is extremely disturbing,” Kevin Hollinbrake, co-chairman of the all-party parliamentary group on fair business banking, told The Times.
It is another blow to Mr Bailey, who has already been called out by an independent inquiry into the LCF scandal by former Court of Appeal judge Elizabeth Gloster.
Ms Gloster said Mr Bailey wanted his name taken out of the report as being responsible for the losses.
Mr Bailey said he had spoken to the Treasury Select Committee on this issue and will be writing a letter to address those claims.
“I never said that I was not responsible for everything that went on,” Mr Bailey told the BBC. “That was my role as CEO. The particular issue … was that the first draft of the report introduced responsibility and culpability together in an inseparable way and they're not the same thing. They are very different things.”
That point has now been withdrawn and Mr Bailey said he takes any disagreements between himself and the Ms Gloster, the report’s author, “very seriously”.
LCF went into administration in January 2019 after it had marketed high-risk, unregulated mini-bond investments directly to private investors.
Ms Gloster’s report found that the FCA granted LCF “inappropriate” permissions to market these products and did not supervise the company in an adequate manner.
Meanwhile, Mr Bailey said he was now more positive about the British economy as Covid-19 was in retreat, though he cautioned that the economic effect of the pandemic was huge.
"I'm now more positive but with a large dose of caution," Mr Bailey said, adding that the British economy would recover in 2020 and get back to its late-2019 level by the end of this year.