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March 6, 2009

FSA in line for further battering

by Gill Montia

Story link: FSA in line for further battering

The reputation of the Financial Services Authority (FSA) is at risk of being further sullied by a compensation claim from a group of investors who are alleging negligence on the part of the regulator.

The Economic Crime Department and City of London Police began an investigation into GFX Capital Markets Ltd in early February, after the investment firm collapsed with estimated losses of £44 million.

A Mr Terry Freeman, who headed the business, is known to have been disqualified from holding the post of company director and according to reports, the FSA had been made aware of concerns about his business practices on more than one occasion.

Lawyers acting for GFX investors who have lost their money are claiming that the FSA had sufficient grounds for intervention and that this could have significantly reduce their clients’ losses.

Since the Northern Rock crisis of 2007, the FSA has been denounced for its failure to effectively regulate the UK’s financial sector.

Later this month, chairman Lord Turner will publish a report on the regulator’s failings in relation to the banking crisis and the proposed reforms.

 

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