Economic Secretary to the Treasury ():
On 23 May 2019, I laid a direction before Parliament using the
powers conferred by sections 77(1) and (2) and 78(5) and (6) of
the Financial Services Act 2012 (“the Act”) and set this out in a
Written Ministerial Statement (HCWS1584). I formally directed the
Financial Conduct Authority (“the FCA”) to launch an independent
investigation into the events relating to the regulation of
London Capital & Finance plc (“LCF”). Paragraph 3 of the
direction required that the investigation focus on whether the
FCA discharged its functions properly (“in a manner which enabled
it to effectively fulfil its statutory objectives”) and with a
particular focus on matters listed in the direction. The
direction required that the FCA appoint an independent person to
undertake the review and that the review should be completed
within one year. The FCA appointed Dame Elizabeth Gloster, who
has had a distinguished career as a barrister and as a judge on
the High Court and the Court of Appeal, to lead the
investigation. I also approved this appointment.
The direction also set out that if the Investigator considered
that it would not be possible to complete the investigation
within one year the FCA must inform the Treasury of the reasons
for the delay and set a revised target date for its conclusion.
The FCA wrote to me in May setting out that the delivery of the
report would have to be delayed to 30 September 2020, and again
in August setting out that the target date for conclusion would
have to be delayed to the 23 November 2020, which reflected
capacity constraints as a result of Covid and delays in the FCA
providing key documents to Dame Elizabeth. I also received
correspondence from Dame Elizabeth on both occasions. Further
information can be found on the government website (https://www.gov.uk/government/collections/independent-investigation-into-the-failure-of-london-capital-and-finance(opens
in a new tab) ).
On 23 November 2020, Dame Elizabeth, in accordance with the
revised timeline, delivered her final written report to the FCA.
In line with the direction, the FCA will now consider the report,
the recommendations and any lessons learnt. Section 82 of the Act
requires the Government to lay before Parliament the FCA’s
written response to the investigation which will include the
investigator’s findings and recommendations.
I recognise that it continues to be a very difficult and
uncertain time for all LCF bondholders. I can confirm today that
I have asked the FCA to work with the Treasury so that the
government can lay before Parliament (and publish online) Dame
Elizabeth’s report and the FCA’s response before the December
recess. This independent investigation is separate to criminal
and regulatory investigations into the failure of LCF by the
Serious Fraud Office (SFO) and FCA which are still ongoing.
