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Bank of England's Bailey in the hot seat over LCF evidence

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Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·3 min read
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Andrew Bailey, Chief Executive Officer of the Financial Conduct Authority, speaks during a
Andrew Bailey, then chief executive officer of the Financial Conduct Authority, speaks during a "Reuters Newsmaker" interview at the Reuters offices in London, Britain, July 6, 2017. Photo: REUTERS/Hannah McKay

Bank of England governor Andrew Bailey has been asked to explain himself after giving evidence to a parliamentary select committee that appeared to contradict the testimony of another witness.

Mel Stride MP, chair of the Treasury Select Committee, has written to Bailey asking him to clarify comments he made when giving evidence about the regulation of London Capital & Finance (LCF).

LCF was an investment company that collapsed at the start of 2019 after raising £237m ($329.1m) from investors, many of them small-time savers and retirees. An independent report by former judge Dame Elizabeth Gloster concluded that the UK's financial watchdog, the Financial Conduct Authority (FCA), failed to properly regulate LCF and failed to protect investors.

READ MORE: Bank of England governor damned over £237m London Capital & Finance collapse

Bailey was in charge of the FCA at the time. He has publicly apologised for the failings under his watch and blamed cultural issues that he was trying to address.

The Treasury Select Committee has been investigating the fiasco and has heard evidence from both Bailey and Dame Gloster. In recent weeks a war of words has broken out between the two over whether Bailey tried to have his name removed from Dame Gloster's final report.

Dame Gloster's told MPs she received “quite a lot of pushback” on her decision to name individuals. She was “quite irritated” and “quite surprised” by letters from Bailey asking for his name to be scrubbed, she said. Dame Gloster concluded the pushback was inappropriate.

READ MORE: Bank of England governor should face 'consequences' for LCF failings

Bailey denied this was true and said he had only tried to remove a suggestion that he was responsible for the LCF fiasco — not to remove any mention of his name. Bailey said he was "angry" about Dame Gloster's portrayal of events.

Dame Gloster subsequently wrote to the committee after Bailey's testimony, providing a copy of a letter from Bailey's lawyer that she said supported her version of events.

In a letter sent to Bailey on Monday, Stride asked the Bank of England governor to "clarify the apparent contradictions between the evidence you gave and Dame Elizabeth’s account". Stride also asked Bailey to clarify apparent errors Bailey made when referring to quotes from Dame Elizabeth and the number of calls received by the FCA's customer services centre.

READ MORE: Bitter row breaks out over London Capital and Finance report

The letter asked Bailey to detail "what lessons you personally learnt from the failings" and provide more detail on answers he gave about financial promotions and prioritisation during his time in charge.

The Bank of England declined to comment. 

Watch: Don't pick a fight with us over City access, BoE boss warns Brussels