The demise of London Capital & Finance (LCF) in 2019 left investors in mini-bonds facing losses of up to 237 million pounds ($324 million) at a time when Bailey was head of the Financial Conduct Authority (FCA).
The government asked former Court of Appeal judge Elizabeth Gloster to review the FCA's handling of the collapse. The report published in December was very critical and pointed blame at Bailey and the regulator's executive committee.
Speaking to parliament's Treasury Select Committee, Gloster said that while Bailey did inherit a difficult situation when he took over the FCA, that did not excuse his overall failure to regulate the investment fund.
"I do think it's a matter to which consideration should be given - not by me but by the chairman and CEO of the FCA and the Treasury in so far as the Bank of England is concerned - as to what they consider is appropriate to do in light of the serious criticism and conclusions I have made," Gloster said.
The FCA declined to comment. The Bank of England and the Treasury did not immediately respond to requests for comment.
The FCA scrapped bonuses for its executive committee for the 2019/20 financial year and has also now banned the sale of mini-bonds to retail investors.
Bailey is due to appear before the same parliamentary committee later in February.
Gloster said Bailey and two other FCA executive committee members at the time, Megan Butler and Jonathan Davidson, had asked her not to name them in relation to the report's conclusions.
Gloster said senior managers of firms regulated by the FCA were required to be personally accountable for their decisions, a system the FCA has also introduced for its top officials.
"That being so ... it was appropriate to mention names," she said.
Bailey, who became Bank of England governor in March last year, has apologised to LCF bondholders for not reforming the FCA fast enough. Davidson is no longer on the executive committee and Butler was reassigned from supervision but remains an FCA executive member.
LCF itself was regulated by the FCA, but not the mini-bonds it sold. However, the report concluded that the watchdog had a flawed approach as to where the regulatory boundaries lay.
"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.
($1 = 0.7313 pounds)
(Reporting by Huw Jones; Editing by David Clarke)
By Huw Jones