FCA’s Collateral investigation nears conclusion
Financial Conduct Authority (FCA) chief Nikhil Rathi told MPs that the investigations into Collateral, including a potential hack into the regulator’s register, are very close to a conclusion and hopes to provide another update by September.
Peer-to-peer pawnbroker and property lender Collateral collapsed into administration in February 2018 and entered liquidation in April 2019.
According to The Times, Collateral told prospective investors it held an “interim permission” for regulated activities and the FCA’s register showed this appeared to the case.
Someone changed the name on Regal Pawnbroker, a separate business where Collateral’s founder Peter Currie was a former director, to make it look like Collateral held the permission instead.
Rathi (pictured) told the Treasury committee that that specific issue has been tightened very considerably and the FCA is investing to keep ahead with cyber security.
He said he hopes to give a very substantive update on the Collateral investigation by September.
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“What I would say is that they are very close to coming to a conclusion,” Rathi said.
“The enforcement investigation is at an advanced stage. I am not going to comment too much further because one element of it is a criminal investigation, but they are at an advanced stage.
“In the context of the cyber-security risks that we are all dealing with, which are published by the National Cyber Security Centre, I don’t think any chief executive is going to say they are comfortable; they are quite sobering in terms of the heterogeneous range of actors who seek to undermine us.
“For instance, you saw what happened in the US with an oil pipeline this week. However, where we have taken action is to deal with that specific issue around the register, where there was an ability to adjust the contact details around permission.
“That specific issue has been tightened up very considerably, but this broader issue of cyber-security—just as we tell the industry, this is an area where we will have to keep investing very heavily to try to stay ahead of a fast-moving adversary environment.”
Rathi did not answer MP Harriett Baldwin’s question on whether there will be a redress scheme to help those affected by the FCA’s particular regulatory failure.
“The enforcement investigation is under way,” he said.
“There are also, as you will be aware, a number of complaints relating to Collateral. So we will address all those complaints in the normal way, as the investigation reaches its conclusion.”
Rathi said he is “broadly comfortable” the FCA’s website reflects all the current participants in the market accurately and is investing very heavily in the register to continually improve the data integrity around it.
“Just because a firm is on the register, it doesn’t mean you get a full level of protection,” he said.
“We are dealing with everything from firms that that are registered for money laundering right through to the largest banking and investment groups in the country.
“So we try to make it more comprehensive in terms of how people understand the information on there.”
