Watchdog bans ex-Co-op chief

THE disgraced former chairman of the Co-operative Bank has been banned from working in the financial services industry, paving the way for a longawaited investigation into events leading to its near-collapse five years ago.

Paul Flowers, a former Methodist minister who chaired the bank between April 2010 and June 2013, had already been convicted for possession of illegal drugs, for which he was handed a £400 fine.

He stepped down from his £132,000-a-year role when a £1.5billion black hole was discovered in the Co-op Bank’s finances following a failed bid for over 600 Lloyds branches.

The Financial Conduct Authority said Flowers’ conduct demonstrated “a lack of fitness and propriety” required to work in financial services.

The City watchdog found that Flowers had been in breach of the bank’s policies by using his work mobile phone to make inappropriate calls to a premium rate chat line. His work email account was used to send and receive sexually explicit and otherwise inappropriate messages and to discuss illegal drugs, despite having been previously warned about misconduct.

The FCA’s executive director of enforcement, Mark Steward, said: “Mr Flowers failed in his duty to lead by example and to meet the high standards of integrity and probity demanded by the role.”

It found that Flowers, pictured, had “demonstrated an unwillingness to comply not only with the FCA’s requirements and standards but also with other legal, regulatory and professional requirements”. Future involvement by Flowers in the financial services industry “risks undermining consumer and market confidence”, it added.

The judgment triggered a new independent review into the supervision of the bank between 2008 and 2013, announced by John Glen MP, economic secretary to the Treasury.

This will be overseen by Mark Zeimer, a former senior official at the Bank of Canada and International Monetary Fund. Glen said: “We are committed to creating a stronger and safer banking system. A vital part of this is ensuring that our regulatory system can learn from past events.”

Nicky Morgan MP, who chairs the Treasury select committee, said the review was “hugely overdue” and must be completed “in good time”.