The Treasury needs to consider whether the governor of the Bank of England should face “consequences” over his mishandling of an investment scandal in a previous job, according to the head of an independent inquiry into the matter. Dame Elizabeth Gloster, a former high court judge, told MPs on Monday that it was for the Treasury and those running the Financial Conduct Authority (FCA) to consider whether action should be taken against three individuals named in her report on the collapse of London Capital & Finance, and what form that should take. The three individuals include Andrew Bailey, who was the chief executive of the FCA from July 2016 until March 2020, when he took the job of Bank governor. More than 11,600 people had invested a total of £237m – an average of £20,000 each – when LC&F collapsed in January 2019. Its “mini-bonds” had promised returns to investors of up to 8% a year. Just before Christmas, the inquiry led by Gloster concluded that the FCA failed to properly supervise and regulate LC&F before the firm went under. The government-backed investigation’s report identified “significant gaps and weaknesses” in the regulator’s policies and practices, and stated that “responsibility for the failure in respect of the FCA’s approach to its perimeter rests with ExCo [the FCA’s executive committee] and Mr Bailey”. During the first in a series of evidence sessions on the LC&F scandal, MPs on the Treasury select committee said it might appear to some observers that there had not been any significant consequences for the senior figures at the FCA who were responsible for the failings. Gloster replied: “Those who are, or I hope will be, informed by my report will need to consider what are the appropriate consequences in the light of the criticisms which I have made, in relation to the organisation and individually.” She added: “I do think it’s a matter for which consideration should be given, not by me but by the chairman and the CEO of the FCA, and the Treasury, so far as the Bank of England is concerned … They should give consideration as to what they consider it is appropriate to do in the light of the serious criticisms and conclusions which I have made.” However, she said that if she was being asked “should they pay a fine, should they return their bonuses,” that was not a matter for her to decide. The Bank of England declined to comment on Gloster’s comments. It is understood that Bailey will appear before the committee as part of its LC&F inquiry next Monday. The inquiry found that the FCA ultimately failed to make sure that LC&F was following the rules, and needed better training for its staff. On 17 December it emerged that the financial services compensation scheme had paid out a total of just over £50m to 2,584 LCF bondholders, and it is continuing to assess outstanding claims. In the wake of the findings, the government said the Treasury would set up a compensation scheme for LCF bondholders.