Bank of England’s Andrew Bailey admits FCA did not do enough to protect victims of LCF minibonds

Bank of England governor Andrew Bailey today told MPs that while he was in charge of the Financial Conduct Authority he may have made a mistake in not prioritising products like those sold to an unsuspecting public by London Capital & Finance.

Bailey was responding to written questions from the Treasury Select Committee after he testified about his role in the regulator’s failures to protect the 11,300 mostly elderly victims of the LCF collapse.

Answering what were the “lessons learned”, he wrote that the FCA had prioritised high cost credit because it took the view that the potential harm such loans pose to vulnerable people was the greatest.

While he brought in rules known as NRRS demanding products like LCF’s minibonds should only be sold to wealthy or sophisticated investors, it had proved not to be enough to protect people who fell outside those categories.

“I believe the outcome on high cost credit has been a huge benefit for those who were, and would have been victims, but LCF has raised serious questions on the effectiveness of the NRRS rules with attendant lessons.

“As a result, the FCA has banned marketing of such high risk investments.”

Many of the victims of the LCF collapse say they were neither sophisticated nor wealthy. Many were elderly and financially naive.