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UK watchdog says "painful lessons" to shape post-Brexit rules

LONDON (Reuters) - Britain’s regulators face “painful lessons” from reviews due in coming weeks that will also raise broader questions over how far consumers should be protected, the Financial Conduct Authority’s departing CEO said on Monday.

An independent review is due on the FCA’s handling of London Capital & Finance (LCF), an investment firm that collapsed in 2019, leaving 11,600 investors facing up to 237 million pounds in losses.

A review into how the regulator dealt with the collapse of Connaught Income Fund Series 1 in 2012 that lost investors over 100 million pounds is also due.

“In the autumn, we will see the results of a number of reviews into potential failures of the regulatory system,” interim CEO Christopher Woolard told a City Week online event.

“I have no doubt there will be painful lessons and the FCA will need to learn from them,” Woolard said.

The watchdog seeks to help millions of ordinary people, such as by asking banks to allow mortgage and credit card repayments to be deferred during the pandemic, Woolard said.

“But the nature of the work we do means the odds are there will be times where we cannot stop failure or where we call a finely balanced judgement wrongly or miss something,” said Woolard, who steps down at the start of October.

“In a highly regulated market, which finance is, should consumers enjoy no risk? Are all failures and losses within the sector, at least in part, regulatory in nature?”

Britain is reviewing financial regulation in light of its departure from the European Union, with full EU access for banks based in the UK due to end in December. It is unclear how much access financial firms will have from January.

“Our message to firms is, therefore, to continue to prepare – indeed to ramp up preparations – for a range of scenarios,” Woolard said.

Strong regulatory standards go “hand in hand” with Britain’s position as a global financial centre, he said.

Reporting by Huw Jones; Editing by Hugh Lawson

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