By Huw Jones
LONDON (Reuters) – Britain’s finance ministry rejected calls on Tuesday to review its appointment of Andrew Bailey as the next Bank of England governor because of several financial scandals on his watch at the markets regulator.
Bailey is chief executive of the Financial Conduct Authority and due to become Bank of England Governor on March 16.
True & Fair, which campaigns for transparency on fees in the financial sector, said in a report on Tuesday that the shuttering of the Woodford equity fund and the collapse of investment firm London Capital & Finance (LCF) raised questions about whether Bailey was “fit and proper” to head the central bank.
The Woodford fund was regulated by the FCA. LCF was also regulated by the FCA but the “mini-bonds” it sold were not.
Hundreds of thousands of investors were trapped in the Woodford funds for months, and some 11,600 bondholders at LCF face losses of up to 236 million pounds ($306 million).
“Andrew Bailey’s tenure as CEO of the FCA has been characterized by a toxic cocktail of negligence, incompetence and indifference to the needs of ordinary depositors, investors and pensioners,” True & Fair co-founder Gina Miller told a news conference to publish its “Asleep at the Wheel” report on the FCA.
Bailey has also overseen poor culture at the FCA, Miller said.
Britain’s new finance minister Rishi Sunak should review the decision by his predecessor, Sajid Javid, to appoint Bailey to replace Mark Carney as governor of the Bank of England from next month, Miller said.
The finance ministry countered that Britain needs experienced, credible leadership in the role of governor and Bailey would deliver that. “With nearly forty years of experience in UK monetary and financial policy, his record speaks for itself,” it said in a statement.
The FCA said it utterly rejects the claims made in the True & Fair report that contains “numerous inaccuracies” and showed “little understanding” of the role of the FCA.
“In fact through FCA interventions millions of people have benefited including the most vulnerable in society,” the FCA said. The Bank of England said it would not be commenting on the report.
Bailey’s appointment is due to be reviewed by parliament’s Treasury Select Committee, though it does not have powers to block it.
Miller said the parliamentary committee should ensure that Bailey’s successor at the FCA can demonstrate a successful track record of pro-consumer protection.
Miller said True & Fair will also launch an online petition to gather 100,000 signatures, the threshold needed to trigger a debate in parliament on Bailey’s appointment.
An independent report into the collapse of LCF is due to report back in the summer. The FCA has already opened its own investigation into Woodford.
John McDonnell, finance spokesman for Britain’s opposition Labour Party, said the True & Fair report was “pretty damning” and reinforced his call last month to postpone Bailey’s appointment until there is an independent review of his time at the FCA.
($1 = 0.7706 pounds)
(Reporting by Huw Jones; Editing by Ed Osmond and Andrew Cawthorne)