London Capital and Finance: Report reveals regulators flaws

The City regulator failed to “effectively supervise and regulate” London Capital and Finance (LCF) which collapsed with losses for investors.

Bank of England governor Andrew Bailey, who was running the Financial Conduct Authority (FCA), has apologised to those who lost life savings.

Some 11,625 people invested a total of £237m with LCF before it collapsed into administration in January 2019.

Many lost all their investment, but may now receive one-off compensation.

“The scheme will assess whether there is a justification for further one-off compensation payments in certain circumstances for some LCF bondholders,” said economic secretary to the Treasury, John Glen.

Former Court of Appeal judge, Dame Elizabeth Gloster, who wrote the review, said the FCA’s failure to regulate properly was due to “significant gaps and weaknesses” in its practices and policies at a time when it was run by Mr Bailey who was chief executive at the FCA before becoming the Bank of England’s governor.

The report said the FCA’s “flawed approach” allowed LCF to look respectable, even regarding its non-regulated products.

“Responsibility for the failure in respect of the FCA’s approach to its perimeter rests with the executive committee and Mr Bailey,” the report said.

In a statement, Mr Bailey said: “As CEO [chief executive] of the FCA between 2016 and 2020, I apologise to LC&F bondholders.

“When I was asked to lead the FCA in July 2016 it was clear that a substantial reform programme to the supervision of many of its 60,000 firms was essential. We took immediate steps to change the approach.

“The required changes in culture, mind-set and systems was a major programme of work across the organisation, which took some time to put into effect. I am sorry those changes did not come in time for LC&F bondholders.”

Many people who put money in to LCF were first-time investors, including inheritance recipients, small business owners or newly retired.

They believed they were putting their money into safe, secure fixed-rate ISAs, approved by the FCA. In fact, LCF was approved, but the products – which were high-risk mini-bonds – were not.

LCF offered returns of around 8% on three-year mini-bonds.

The FCA ordered LCF to withdraw its marketing and, following further investigation, then froze LCF’s assets leading the company to collapse into administration.

A report by the administrators said there were a number of “highly suspicious transactions” involving a “small group of connected people” which led to large sums of investors’ money ending up in their “personal possession or control”.

Many investors face the possibility of losing most, if not all, of their money. In some cases, that was many tens of thousands of pounds.

Several independent financial advisers said they warned the FCA, some as far back as 2015, about what they felt were “misleading, inaccurate and not clear” adverts, often promoted on social media.

Among those who lost money invested in LCF was Amanda Cunningham, who had put decades worth of savings into the scheme – for her son’s future.

“He [her son] suffers with autism, I don’t even know if he’ll be able to hold down a job. That money was there to give him the life he should have,” she told Radio 4’s Money Box.

“I can’t afford to keep him forever and if anything happens to me that money was there for his future”.

She said she hoped the review would change the accusation that the investors were at fault for losing their money. She has only received a fraction back in compensation.

“It [the FCA] should have protected us,” she said. “The whole system is at fault, and wrong.”

Dame Elizabeth Gloster, a judge, was appointed by the FCA, on direction of the government, to conduct an independent review into the events and circumstances surrounding the failure of LCF.

Specifically, she considered whether the FCA “discharged its functions in respect of LCF in a manner which enabled it effectively to fulfil its statutory responsibilities”.

Her report has revealed a string of failures, with the FCA missing various opportunities to look further into LCF. Call handlers failed to refer allegations of fraud, and the FCA did not pay enough attention to unregulated aspects of the business.

Andrea Hall, who speaks for a campaign group of hundreds of LCF Bondholders said the report revealed “gross regulatory failure” by the FCA.

“The FCA threw this back in our faces. I’m ecstatic that all the hard work to prove it has been worthwhile and has been acknowledged,” she said. “This review is better than we could have imagined.”

Charles Randell, who chairs the FCA, said: “We accept all the recommendations that have been made to the FCA and we are profoundly sorry for the mistakes we have made.

“The collapse of LCF has had a devastating effect on many investors and we will do everything we can to conclude our investigations as quickly as possible and support the recovery of further funds for investors.”

Bonuses for the executive committee members in 2019-20 which had been deferred would not now be paid, the FCA said.

Separate investigations by the FCA and the Serious Fraud Office (SFO) into LCF are continuing. The SFO has made five arrests.

Compensation is also being dealt with by other bodies, but more details of the new Treasury compensation scheme will be revealed in the new year.

Earlier this month, the FCA permanently banned mass-marketing of speculative mini-bonds to retail investors.

Air pollution death ruling: What comes next?

For the first time in the UK – and possible the world – air pollution has been recognised as a cause of a person’s death. But was the ruling just a one-off? And what does it mean for others?

On 16 December, Southwark Coroner’s Court in London found that air pollution “made a material contribution” to the death of nine-year-old Ella Adoo-Kissi-Debrah.

She had lived near the South Circular Road in Lewisham and died in 2013, following an asthma attack.

Her case has been making headlines around the globe.

Ella had a rare type of acute asthma; she was particularly susceptible to the toxic gases and particles in air pollution. In his verdict, the coroner Philip Barlow said the cause was “multi-factorial. It was down to both genes, and the environment”.

From a legal perspective, David Wolfe QC, a barrister specialising in public law, said: “Although this decision does not have any binding impact on other courts, it is still important as the first formal legal recognition of air pollution as contributing to the death of a particular individual.

“That will help other individuals who want to press for greater action on air pollution. That could be action from public bodies which make decisions about polluting activities such as traffic and roads, or the public and private bodies which themselves cause major air pollution.”

At the conclusion of the two-week inquest, Mr Barlow said Ella had been exposed to “excessive” levels of pollution. The pollutants included nitrogen dioxide (NO2) – a gas emitted by combustion engines that can irritate the airways and aggravate respiratory diseases.

Levels of NO2 near Ella’s home exceeded World Health Organization (WHO) and European Union guidelines.

The inquest heard that in the three years before her death, she had had multiple seizures and was admitted to hospital 27 times.

Katie Nield, a lawyer with the firm Client Earth, which has brought numerous legal cases against European governments over air pollution, said: “This was a decision about the cause of Ella’s death, rather than a determination of who was at fault – so it doesn’t provide a direct precedent that others can rely on.”

“By explicitly identifying air pollution as a cause of death, this could serve as a signal for the possibility of justice for other people. The evidence at this inquest was found to be strong enough to show that pollution played a role in cutting Ella’s life short.

“The possibility of making this link in a court of law for the many people who suffer as a result of breathing the dirty air around them may now seem like less of a leap.”

But does this case alter how experts view the science behind air pollution? In his verdict, the coroner noted that the health impacts of air pollution “have been acknowledged for many years”.

He referred to a report by the House of Commons Environmental Audit Committee in 2010, which concluded there were 35,000 premature deaths a year as a result of air pollution. He also referred to several other papers.

The key in Ella’s case was that a leading professional in his field, Prof Sir Stephen Holgate, was prepared to investigate all the evidence to find the link between a single death, and levels of pollutants in the air. He was the star witness in the inquest.

“This is the first time a distinguished medic has stuck his head above the parapet,” said environmental health and air quality scientist Prof Roy Harrison, from Birmingham University.

“He looked at the data, looked at the health records, and said on the balance of probabilities air pollution was a major causal factor in the death of this child.”

However, Prof Harrison said it had not changed the science in any way. Instead, it had confirmed what scientists had long known was the case, Nevertheless, he said, it would be hard for pollution to be put on another death certificate without such a detailed inquiry.

“I’m afraid that same thoroughness would be required in other cases,” he explained.

Ella’s mother, Rosamund Adoo-Kissi-Debrah, has worked tirelessly to uncover the facts behind her daughter’s death.

“Unless a parent or a dependent of a person… were extremely persistent, as Ella’s mother was in this case, I think it’s very unlikely. I don’t think a doctor is going to feel sufficiently confident in writing a death certificate to put air pollution as a causal factor, even though it’s opened up as much more of a possibility for them.”

He added: “Establishing that link in an individual case is going to be extremely difficult.”

But Prof Harrison said that, now, the UK government couldn’t “turn around and say it’s just a load of statistics”.

Asked whether this verdict only be relevant to people with asthma as unusually severe as Ella’s, Prof Jonathan Grigg, another of the expert witnesses in the case, said: “The evidence isn’t that… actually, the evidence we know about asthma attacks, asthma deaths, causation of asthma, is for the whole mix of asthmas. You don’t have to have this particular variant. It shows that small changes have this avalanche effect.”

He told BBC News that asthma deaths were rare. But now, for an individual living in a zone of known high air pollution, he said it was “going to be difficult to say that air pollution has not had a role”.

He added: “You wouldn’t have to have such a detailed discussion. What it will do [is that] the profession will be much more amendable to discussing this.”

Prof Grigg said that a patient could now be advised: “You live on the North Circular road, your child has severe asthma, you know the case of Ella, how can we help you to consider moving away from that area?

“If you are in social housing, there would now be a strong case now for the council that they had to re-house you. That could make a tremendous difference to a lot of individuals who have severe asthma.”

Prof Gavin Shaddick, a government adviser on air pollution, who conducts epidemiological studies on a national and global scale, said the harmful impact of air pollution had “often been difficult to understand, and communicate”.

“This deeply regrettable case will help us to think about the effects of air pollution in a bottom-up manner; effects on individual people that together sum to those population level estimates of health impacts.

“It will… add to the substantial, and growing, evidence of the adverse health effects of air pollution, both in the UK and internationally.”

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Coronavirus: Northern Ireland health officials propose six-week lockdown

Health officials have proposed a six-week lockdown across NI in a bid to curb the spread of the virus, BBC News NI understands.

It is believed a review of the measures would take place after four weeks.

Executive ministers are meeting to discuss the plan, brought by Health Minister Robin Swann.

It proposes the closure of non-essential retail after Christmas Eve, and hospitality only allowed to offer takeaway services.

Close contact services including hairdresser and beauty salons would also have to shut again.

It is also understood health officials have proposed essential shops in NI would have to close by 20:00 GMT every night during the first week of a new lockdown.

It is believed there could be changes to what is classed as essential retail, and the potential that click-and-collect services would not be permitted.

The first week of a fresh lockdown could also see tighter rules on indoor and outdoor gatherings and a ban on people meeting others in private gardens.

Health officials have also proposed measures to limit the reopening of schools in January and it’s understood a package of interventions will be drawn up by the education and health departments.

However any new lockdown restrictions will have to be signed off by the whole executive, which is meeting now to consider Mr Swann’s paper.

On Thursday, a further 12 Covid-linked deaths were recorded in NI and a further 656 cases of the virus.

Hospitality Ulster said a full lockdown may now be required.

Chief executive Colin Neill said his board would support a full lockdown to get the virus under control.

Mr Neill accepted a lockdown would have a big impact on the hospitality sector but added “what is worse is opening and closing all the time”.

“Every time you have to reopen costs a lot of money and every time you have to close costs a lot of money because of wastage,” he told BBC’s Stephen Nolan Show.

“If we are going for lockdown, then we will support a total lockdown until we get this thing under control,” he said.

“I think we can all see the situation at our hospitals,” he said. “We need to go back to what we did in March and April.”

Mr Neill said many within the hospitality sector only remained open so they could earn enough to pay their contribution towards furlough and retain their staff.

The new proposals before the executive come amid warnings from health officials that the system is struggling with winter pressures exacerbated by the pandemic.

Ministers will have to decide the date of when any new measures would take effect, how long they would last and how strict they would be.

They will also assess the latest data from the chief medical officer and chief scientific adviser regarding the R-number in NI, which measures the infection rate of the virus.

The executive has expressed concerns that the spread of the virus has not reduced following a two-week limited lockdown, and that cases could spike further after the Christmas holidays unless more interventions are introduced.

The lockdown, which ended last Friday, saw non-essential retail, close contact services and hospitality largely have to shut – but Chief Scientific Adviser Prof Ian Young said evidence showed not enough people had followed the “stay at home” guidance.

Ministers are also expected to discuss a decision by England, Northern Ireland, Scotland and Wales to strengthen guidance about how people can meet up with families over Christmas.

On Wednesday, London and the devolved governments agreed to keep in place a plan to allow households to form “Christmas bubbles” from 23 to 27 December.

The first and deputy first ministers said they wanted to ensure people in Northern Ireland were not isolated over Christmas, but stressed that “personal responsibility” should be a priority for anyone planning to have contact with others.

Economy Minister Diane Dodds said she would also bring more details of her new support scheme for pubs that do not serve food, which have been forced to remain closed, to Thursday’s executive meeting.

It has yet to open, but last month the executive allocated £10.6m in funding to the sector.

It was always a case of when, not if, new restrictions would be imposed following the brief reprieve over Christmas.

Mr Swann’s use of the word “extreme” has some Stormont sources believing that we could be looking at a lockdown similar to that initially imposed back in March.

It could even be tougher in some respects, with ministers aware a hard, long period of measures is needed in order to get transmission rates down.

Expectations and anxieties have been raised yet again.

Some businesses – having just reopened last week – will express frustration that they could lose out on important post-Christmas sales if they are told to shut again before New Year’s Eve, particularly if extra financial support from Stormont isn’t put in place.

But the biggest issue ministers have to address is the lack of compliance, and there is a growing fear around the executive table that not enough people are heeding the message any more.

Cases of the virus in Northern Ireland have not significantly reduced, despite several periods of restrictions since October.

On Wednesday, eight deaths linked to Covid-19 were recorded in Northern Ireland, taking the Department of Health’s total to 1,143.

There were 510 more positive tests recorded, meaning there have been 59,631 cases overall.

Health officials have urged the politicians to act quickly, in light of hospitals facing significant pressures that could increase as NI moves further into the winter flu season.

Legoland pledges review over disabled boys humiliation

Legoland will review its policies after a Gloucestershire family was “humiliated” when their child was asked to walk to be allowed on a ride.

Seven-year-old Sebby Brett has an undiagnosed medical condition which has left him unable to walk without help.

Legoland Windsor will amend its evacuation policies for three rides with immediate effect, and will review seven other rides.

Sebby’s mum Joanna said she was “thrilled” by the news.

The change follows discussions with disability rights lawyers, an intervention by Stroud MP Siobhan Baillie in Parliament, and a 28,000-signature petition for better disabled access to leisure attractions.

As well as the evacuation polices, changes will be implemented from March 2021 for a further seven rides, removing the requirement for disabled guests to walk 10 metres or up steps.

Mrs Brett said: “Sebby can’t wait to return to Legoland and know he can just have fun, that he won’t be made to walk.

“His sister Lottie is really excited he can come on the same rides as her.”

A Legoland spokesperson said: “We are already in the process of reviewing our staff training and how we communicate ride restrictions and accessibility to guests before they arrive and on the day itself.

“We have invited the Brett family to be a part of this review and I look forward to their valuable input.

“We are proud of the changes we have already made but we know that we can always do more.”

The theme park has also made a donation to Small Steps, a charity which helped Sebby with strength training before he started school.

Reece James: Chelsea defenders Christmas presents stolen from car

Thieves have broken into Chelsea star Reece James’s car and made off with Christmas presents he had been planning to give to a children’s charity.

The 21-year-old had been working with the Felix Project, a London-based charity that provides free meals for children, when the gifts were stolen.

An Instagram post shows how the window of his Mercedes was smashed before the presents were stolen on Wednesday.

The footballer said: “What goes around comes around.”

Continuing his post, he said: “Another rewarding experience with the Felix Project today serving meals to the younger generation.

“Hopefully we spread some joy ahead of a challenging Christmas period. Unfortunately, I was met with huge disappointment when returning to my car.

“During the event, someone felt the need to break in and steal gifts that I was due to go and donate later in the day.”

The defender has been taking part in the Evening Standard and the Independent’s Food For London Now and Help the Hungry campaigns, to help provide free meals for children in London.

The Met Police has been contacted for comment.

Future of economy unusually uncertain, warns Bank of England

The future of the UK’s economy is “unusually uncertain”, the Bank of England has said, as it held interest rates at record lows.

It said new coronavirus vaccines boded well for long-term growth, but that a recent jump in cases would drag on the recovery.

Uncertainty over the future UK-EU trading relationship also clouded the outlook, it added.

The central bank held rates 0.1% and left its stimulus programme unchanged.

“The outlook for the economy remains unusually uncertain,” the Bank said.

“It depends on the evolution of the pandemic and measures taken to protect public health, as well as the nature of, and transition to, the new trading arrangements between the European Union and the United Kingdom.”

The Office for Budgetary Responsibility, the government’s independent forecaster, predicts the UK economy will shrink by 11.3% this year – the biggest decline in 300 years. It expects unemployment to peak at 9.7%.

The Bank said the successful trialling of some Covid vaccines and plans to roll them out next year were likely to “reduce the downside risks to the economic outlook”.

However, it said recent global activity had been affected by the increase in Covid cases and re-imposition of tougher than expected restrictions.

“The successful rollout of vaccines should support the gradual removal of restrictions and rebound in activity,” it said, “although it is less clear how this prospect will affect the immediate economic behaviour of households and businesses.”

At 0.3% in November, inflation remains a long way below the central bank’s 2% target.

However, it said it was ready to accept inflation above 2% if a no-deal Brexit caused sterling to fall sharply, pushing up prices of imports.

The Bank also said it planned to keep the pace of its purchases of British government bonds broadly unchanged in early 2021 as it tries to shore up the economy.

But it said it was ready to increase them again if the outlook soured.

Samuel Tombs at Pantheon Macroeconomics said this was the “clearest indication yet that it would ease monetary policy further, in the event of no-deal”.

Covid: Staggered return for Wales schools in January

There will be a staggered return for schools after the Christmas break, the Welsh Local Government Association has said.

Online learning will continue at the beginning of term and schools will provide face-to-face learning for the majority of their pupils by 11 January.

A full return to the classroom is expected by 18 January at the latest.

Minimising disruption to children was a priority, the WLGA said.

It comes after a plan to introduce lateral flow tests to schools was announced, so contacts of people who have tested positive can continue going to school if they test negative daily for the duration of their 10-day isolation period.

Secondary schools moved online on Monday for the rest of this term, and primary schools subsequently chose to follow suit.

Arrangements will be made for vulnerable learners and the children of critical workers.

A WLGA spokesman said: “The plan to return to schools in January will give some certainty, whilst also allowing for flexibility to take account of local circumstances.

“Teachers, school staff, learners, and parents and carers’ response has been remarkable throughout this challenging year.

“It has not been easy, and we thank them for their continued patience and perseverance to help keep our communities safe.”

The Welsh Government said the flexible approach would enable schools to make safety arrangements for their own circumstances.

“We know from our children and young people that they learn best when in the classroom receiving face-to-face learning, so any measures we put in place must look to minimise further disruption to their education,” it added.

The WLGA said some councils had opted for inset days on 4 and 5 January.

Powys council confirmed this was the case in its area, with all pupils returning on 6 January.

Staggered return for Englands secondary schools next term

The return to secondary school in January will be staggered in England, with some pupils starting online rather than in class, says the government.

It will allow schools to set up a Covid testing scheme – but exam-year pupils will start term as usual.

The National Education Union said making the announcement right at the end of the school term showed “panic”.

Education Secretary Gavin Williamson said testing would “clamp down” on the virus after the Christmas break.

“Armed forces personnel” will support the planning for testing in schools, says the Department for Education.

Apart from those taking GCSEs, A-levels and vocational exams next year, secondary school pupils will study online for the first week back in January.

This is to allow schools to make preparations for mass Covid testing – which will offer school staff a test each week and a daily test for seven days for pupils in contact with a positive case.

Those exam year pupils returning for face-to-face lessons will also be offered tests, with all testing to be on a voluntary basis and requiring parental consent.

Face-to-face learning is expected to re-start for all by 11 January.

A similar scheme has been announced for Wales, where schools went online on Monday. A full return to the classroom is expected by 18 January at the latest.

But school leaders have reacted angrily at having to set up and manage such a testing system with so little notice – with the National Association of Head Teachers calling it a “shambles”.

“They have handed schools a confused and chaotic mess at the eleventh hour,” said the union’s leader Paul Whiteman.

Jules White, head of Tanbridge House School in Horsham, said: “The government has spent £22bn on a mass testing programme for test and trace.

“Schools are being asked to deliver mass testing for staff and students during the Christmas period with no funding, an ‘idiot’s guide’ handbook and barely any notice.”

The government is insisting the change to the start of term is not an extension to the school holidays and primary schools will not be affected by the move.

But it comes after the Department for Education instructed all local authorities to keep schools open in the final days of term, despite several initially telling parents that schools would close early and head teachers calling for more flexibility for online study.

Teaching unions have challenged the practicality of being expected to train and deploy an “army of volunteers” to run the testing.

The National Education Union has now written to Education Secretary Gavin Williamson saying the plans for a school testing system are “inoperable”.

It said: “Telling school leaders, on the last day of term [for many schools], that they must organise volunteers and parents, supported by their staff, to test pupils in the first week of term, whilst Year 11 and 13 pupils are on site for in-school teaching, is a ridiculous ask.”

Teachers were already “exhausted by the unreasonable demands, backed by legal threats, that they have been subjected to this term”, said the union’s letter.

It added that running such medical procedures was “significantly outside the experience and job description” of school staff, highlighting expert advice that tests carried out by non-specialists were less likely to be effective.

Patrick Roach, general secretary of the NASUWT teachers’ union said: “Yet again the government is announcing significant changes affecting schools with little or no time to prepare before the Christmas closure period.”

He said it was not the responsibility of teachers or school leaders to undertake testing of pupils or employees.

“The government has to ensure that it puts into place all the necessary resources needed to deliver the practical and financial support to schools to ensure safety in schools,” said Dr Roach.

Association of School and College Leaders general secretary Geoff Barton said: “We are very concerned about the feasibility of setting up a testing programme at the scale envisaged.”

He added: “The profession is very willing to work with the government over how to roll-out mass testing, but ministers must understand that chaotic, last-minute announcements do not constitute a collaborative approach.”

As the plans for January have been announced, an official study suggests virus rates in schools reflect the levels in their local communities.

Virus rates have been growing fast in some areas, including London and south-east England, in recent weeks, with many schools affected.

The analysis of tests on 10,000 staff and pupils from Public Health England, Office for National Statistics and the London School of Hygiene and Tropical Medicine found 1.24% of pupils and 1.29% of staff tested positive for coronavirus in schools.

However, the impact of those cases will have been felt by many more, as close contacts were required to go home and self-isolate.

The governments of Scotland, Wales and Northern Ireland have not announced any changes to the start of the January term, but schools in Wales moved online last Monday.

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