Andrew Bailey’s reputation has been dealt a serious blow after a row erupted between the Bank of England Governor and a former judge.
Bailey, who took the helm at the Bank last March, denied in front of a panel of MPs on Monday that he had tried to have his name removed from a report accusing him of failings at the Financial Conduct Authority (FCA).
But the report’s author, former Court of Appeal judge Dame Elizabeth Gloster, hit back yesterday – claiming that Bailey was wrong to tell the MPs on the Treasury Committee that there had been a ‘fundamental misunderstanding’.
Former Court of Appeal judge Dame Elizabeth Gloster, claimed that Andrew Bailey was wrong to tell MPs that there had been a ‘fundamental misunderstanding’ over the LCF scandal
She added that it was misleading for Bailey to say he had been ready to own up to his mistakes.
Tory MP Kevin Hollinrake, a prominent voice on fair business banking, called the row ‘extraordinary’.
He said: ‘This has absolutely damaged Andrew Bailey’s credibility, 100 per cent. He is part of the phenomenally important financial sector and of course he must take responsibility for his errors.’
Gloster’s report, published last December, addressed the FCA’s failures relating to the collapse of London Capital & Finance at a time when Bailey was chief executive of the City watchdog.
The report accused Bailey of overseeing an ineffective culture and failing to make changes quickly enough to protect savers in the LCF scandal.
It added that Bailey had tried to persuade Gloster not to name him as personally responsible, a request the former judge found ‘disappointing’ and refused to grant.
Bailey told the Treasury Select Committee this week there had been a ‘fundamental misunderstanding’ and that he fully accepted responsibility for the failings. He said he was ‘angry’ with any suggestion he wanted to redact his name entirely.
He said he had only wanted his name removed where there was a suggestion that he was personally culpable for the failings, as he drew a distinction between responsibility and blame.
Once the ambiguity between culpability and responsibility was removed from the draft report, Bailey said, he was happy to be named.
But Gloster said in a letter to the Treasury Committee’s chair Mel Stride on Monday that Bailey had made errors when speaking to the committee.
She wrote: ‘To the extent that Mr Bailey’s evidence was that his representations to me were limited to requesting a distinction between personal culpability and responsibility (which was my understanding of his evidence today), I must disagree.’
She quoted from submissions which Bailey’s lawyers had sent her. One said: ‘No benefit arises (and the draft report’s findings and conclusions are not strengthened) by the attribution of responsibility to particular individuals – whether Mr Bailey or the executive directors of supervision.
‘This is a freestanding reason for the removal of the references to Mr Bailey’s responsibility.’
Andrea Hall, who leads the LCF bondholders’ action group, said victims were ‘beyond upset, beyond annoyed’ with Bailey.
She said: ‘£6.7million of public money was spent on the investigation. We would expect a world-class chief executive to have the ability to express himself clearly, relevantly and factually, without being defensive or aggressive, while still being appropriately assertive.
‘LCF bondholders are now horrified at this latest development.’
The Bank of England said: ‘As the Governor made clear in Parliament, his legal representations were made in the context of a draft report which was not clear on the distinction between personal culpability or blame, and responsibility.
If that had been made clear in the draft report, the Governor would not have needed to make the representations. At no point, was his intention to imply he did not take full responsibility.
‘He fully accepts responsibility for everything that occurred during his time at the FCA and welcomed the opportunity yesterday to reiterate that, and his apology to bondholders.’
