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FCA says sorry for Connaught scandal delays

Financial Conduct Authority apologises for delays in responding to the £100 million Connaught fund scandal. MPs urge regulator to do more.

 
FCA says sorry for Connaught scandal delays

The Financial Conduct Authority (FCA) has apologised for its delayed response to the Connaught property fund scandal in which investors lost up to £100 million four years ago.

According to Citywire's New Model Adviser, a senior complaints investigator at the FCA has admitted the regulator was slow to decide what to do about the Connaught Series 1 Income Fund, which invested in bridging loan firm Tiuta and collapsed in September 2012.

‘While I am satisfied the authority has considered the options available to it, how it could protect investors and has taken regulatory action relatively promptly, I do have concerns about the time it took to reach internal decisions about the full extent of its powers in this situation,’ Chris Green wrote to a financial adviser who had accused the regulator of gross negligence.

News of the apology comes a day after the FCA’s new boss, Andrew Bailey, insisted the regulator was taking the investigation ‘very seriously’.

‘This is a very serious issue and I can assure you we take it as such,’ Bailey told the FCA’s annual public meeting. ‘It is subject to investigation...there are therefore limits to what I can say in the context of the case, we don’t provide a running commentary on investigations of that nature.

‘But I can assure you we will use whatever powers are most appropriate and can be used in the wake of where the investigation goes. The use of powers will receive very serious consideration,’ said Bailey (pictured), who previously ran the Prudential Regulation Authority.

The FCA has come under fire for its handling of the Connaught scandal after apologising for its poor treatment of the whistle blower whose warnings about the fund were not heeded by the FCA’s predecessor, the Financial Services Authority (FSA).

George Patellis, chief executive of Tiuta, contacted the FSA in April 2012 about his concerns 18 months before the fund was suspended and it was revealed to have invested in fictitious secured loans. He was offered £500 compensation in May.

The Connaught fund was originally launched as a Guaranteed Low Risk Income Fund in 2008. Capita Financial Managers was the fund’s authorised corporate director (ACD) until 2009 when it resigned and passed the job on to Bluegate Capital. The FCA has said it investigating the actions of Capita and Bluegate.

MPs have formed an all-party parliamentary group to push for justice for Connaught investors. Scottish National Party (SNP) MP Kirsten Oswald, who chairs the group, said the group had written to Bailey.

‘We are asking Mr Bailey to look seriously at the failure of the FCA to address this long-running injustice,’ she said. ‘If he really wants to improve the protection of consumers and the integrity of the UK’s financial sector, he should use the Connaught failure as a case study of what is wrong.’

‘The people who made mistakes weren’t the investors and their advisers, but the fund backers who walked away when problems appeared and the regulators who have failed for five years to hold them to account. Mr Bailey needs to end the double-standards, delay and denial that characterise the FCA’s efforts to date, and use the powers the regulators have been given to really make a difference.’

Adam Nettleship, the director at Bigmore Associates in Surrey, who complained to the FCA on behalf of some of his clients, said he had rejected an offer of £200 compensation from the regulator as ‘derisory’.

2 comments so far. Why not have your say?

Nobby Clark

Jul 20, 2016 at 18:49

So....'it was revealed to have invested in fictitious secured loans'.....Well how apt then that said fund was recommended by the Highwayman himself, one Martin - wannabe actor - Rigney. (Topps Rogers). He should do well as an actor, he managed to put on quite an act as his role as an IFA .... bastard, I still hope I meet him in an alley on a dark night...

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Farmeronabike

Jul 22, 2016 at 13:46

@Nobby Clark . Mr Rigney sounds about as popular as Des Phillips of UK Acorn,specialist partner to Connaught for the Series 3 fund,who missold the loans to farmers resulting in 100% default and mass repossession. These people should be tied up in town squares and stoned by their victims.

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