FCA's Adamson under fire

 
A co-op bank sign

Clive Adamson, the financial regulator who last week told MPs that the widely criticised appointment of Paul Flowers as chairman of Co-op Bank was the "right decision at the time", is today under fire for alleged "disturbing inaccuracies" in his evidence to the Treasury Select Committee.

Mark Taber, the financial specialist who corralled retail holders of Co-op Bank's bonds to accept the failing bank's rescue plan, accuses Mr Adamson of misrepresenting "the FCA's involvement in the restructuring" and "are even incorrect as to the deal we ultimately negotiated for retail investors".

Mr Adamson, the director of supervision at the Financial Conduct Authority, told MPs on the Treasury Select Committee: "The retail bondholders, in my view, received as best a deal as we could get for them" and that he accepts "responsibility for doing the best for bondholders that we could do given the events that have occurred".

Claims

But Mr Taber, in a letter to members of the Treasury Select Committee, makes a couple of claims:

1) That the FCA never responded to a request from the retail bondholders' legal advisers for the FCA to force the Co-op to engage formally with the retail investors.

2) That in reply to a letter from Mr Taber and Niall Booker (Co-op Bank's chief executive) to Mr Adamson and Martin Wheatley (chief executive of the FCA), requesting help in the communication of the rescue offer to bondholders - because Co-op Bank would have gone bust if the offer had not been accepted - the FCA said that it was "not responsible for proactively driving communication of the offer".

Paul Flowers arrived at Stainbeck police station on Tuesday to answer bail Paul Flowers arrived at a police station on Tuesday to answer bail
Haircut?

Mr Taber cites emails from the Co-op Bank and two leading investment banks, Greenhill and Moelis, corroborating his claims.

Mr Adamson also told MPs that most retail bondholders "retained their income for 10 years and then suffer a haircut thereafter".

In fact, retail bondholders had a choice of maintaining their income for 12 years, at which point the value of their entire investment would be wiped out (which is not the same as a haircut), or took reduced income for 10 or 12 years and then would incur a haircut (loss of capital value) of between 15% and 50%.

The FCA said: "We strongly refute any suggestion that Clive Adamson misrepresented the FCA's role in the Co-op Bank's Liability Management Exercise (LME). The FCA's role in the LME has always been to ensure bondholders are treated fairly.

"Because of the recently announced enforcement investigations by the FCA and PRA, we cannot provide further comment. The Chancellor has also announced an independent review into the events that led to the LME and this will include the role of the FSA and its successors, the PRA and FCA."

 
Robert Peston, economics editor Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    +1

    Comment number 36.

    @loglorry "Mark Taber is a man with huge integrity. He spent many hundreds of hours working on behalf of pensioners to minimise the losses they incurred. "

    Didn't he setup a series of websites promoting these kinds of investments and even one (fixedincomeorderbook - 'fiob') which actually enabled pensioners to buy these kinds of investments in the first place?

  • rate this
    0

    Comment number 35.

    Effectively interested parties, i.e, The Co-Op. Ed Balls, The Labour party the FCA and the auditors are ALL responsible for the failure of the Co-OP bank and yet it is the Bondholders who have taken the financial hit. THET didn't run the bank, nor were they responsible for the financial mismanagement.

  • rate this
    +1

    Comment number 34.

    30 (to the moderators) why fracking regulation is the same as financial regulations

    The problem is the way that regulation (so called independent regulation) is used as a political cover system for the way the establishment's iron grip on the country is enforced.

    All these guys are front men - lackeys of the corporate state (bankocracy).

    The' theory' is regulation is independent - but it isn't!

  • rate this
    0

    Comment number 33.

    Clive Adamson taking credit, from an unpaid campaigner, for getting the best deal for private bondholders is like Col Ghaddafi saying he drove through electoral reform in Libya.

  • rate this
    +1

    Comment number 32.

    31.Chris London
    "Never mind about the FCA you should look at the BBC for reporting that inflation has reached 2% However fail to mention that RPI actually went up to 2.7%"

    ==

    Yes, and real property rose by 8%, if you believe the lenders. Both RPI and CPI are near-meaningless, as to the value of money.

  • rate this
    +2

    Comment number 31.

    Never mind about the FCA you should look at the BBC for reporting that inflation has reached 2% However fail to mention that RPI actually went up to 2.7% in any of the news bulletins that I saw / heard today. Surley this is selective journalism and should be addressed.

  • rate this
    0

    Comment number 30.

    Fracking panic has set in at No10! (see news)

    This is all about regulation and the fact it does not exist and Cameron knows it doesn't (just like the FCA etc)

    Next pressure points:

    1. No fracking within 1500 ft of homes like the USA
    2. Designate permitted lorry routes to sites only
    3. Frackers pay for the necessary road improvements.

    Watch David Cameron fold just like origami!

    But Why?

  • rate this
    0

    Comment number 29.

    what do you expect, typical governmental and regulator butt covering exercise.

    Don't worry it's all the bankers fault

  • rate this
    0

    Comment number 28.

    Thats the UK business leaders where ever you look -

    not even average in what they do, big moouth, laying to the end and hang on as long as you can to the 6 figure salary....disgusting.....and deadly for the UK economy....

  • rate this
    0

    Comment number 27.

    They could have saved the people, but they chose to save the banks.
    Wrong call; this is just going to go on and on and on.

  • rate this
    0

    Comment number 26.

    @24 One can only hope that the trilogy you describe forms into it's own giant vortex that's flushes the lot of them down the pan.

  • rate this
    +3

    Comment number 25.

    Every regulatory body should have at least two members from outside the industry that they are regulating.

    The 'revolving door' will need to be slammed shut.

    When will we receive from the regulators a list of all the banking thieves involved in the numerous criminal financial scandals in order not to be contaminated in future financial transactions?

    If not the regulators, the police?

  • rate this
    +2

    Comment number 24.

    When this kind of thing happens you have to decide whether you are looking at incompetence, venality or politics. And if you choose incompetence you need to ask whether the appointment of the incompetent decision-maker was itself down to incompetence, venality or politics. And so it goes on. And on. Please beam me up, Scotty. Anywhere.

  • rate this
    +2

    Comment number 23.

    There is talk about a 'recovery' in the UK economy.

    In view of recent past experience it is doubtful if ordinary middle and working class families will benefit from the expected growth.

    It appears that the role of the regulators is principally to protect and advance the interests of the criminal elements that continue to infest the national and international financial community

  • rate this
    +2

    Comment number 22.

    .
    Lack of Moral Hazard leading to widespread lack of morals.

    They are all bankers after all.

    Remember that as the bonuses are handed out in the coming weeks.

  • rate this
    +5

    Comment number 21.

    The FCA are supine and incompetent. It seems they exist solely to prevent the past and present and no doubt future Govts or civil servants having to take any responsibility or pay for anything. Is Adamson an idiot or does he think we are?
    If it were not for Mark Taber and those who spent many unpaid hours helping him, Co-op investors would have been totally shafted. The FCA did nothing, nothing.

  • rate this
    0

    Comment number 20.

    Maybe, just, at long last, we're getting somewhere.

    However, breathing normally here.

  • rate this
    +4

    Comment number 19.

    So the FCA were unresponsive, unhelpful and made factual errors?

    An improvement on the FSA then?

  • rate this
    +4

    Comment number 18.

    This is exactly what happens when there are no laws backed up by the judicial system, merely 'rules, guidelines and regulations'. As with the whole of the financial sector, until they are brought into line with the rest of society, having to abide by laws, then this sort of thing will continue ad nauseam.

  • rate this
    +2

    Comment number 17.

    Yet more proof that the catatonic FCA was permanently asleep at the wheel. One wonders if the FCA ever actually did anything besides drawing their immense salaries, building up their vast pensions, being wined and dined by the criminals and spivs that they were supposed to be supervising, and fawning over the politicians who appointed them to their sinecures.

 

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