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David Cameron calls for FCA inquiry into ex-Co-op chair Flowers

Prime Minister David Cameron has called for a regulatory inquiry into the appointment of Reverand Paul Flowers at the Co-operative Bank.

Speaking at Prime Minister’s Questions today, Cameron said Chancellor George Osborne is holding talks with regulators.

MPs have lashed out at the FSA for approving the appointment of Flowers to a senior banking position. Giving evidence to the Treasury select committee appearance last week Flowers did not know the size of the Bank’s balance sheet or loan book.

Flowers, a Methodist minister and former Labour councillor, joined the Co-op Group’s board in 2008 and was chairman of Co-op Bank from April 2010 until June.

He has been suspended by The Methodist Church and Labour after he was caught on camera buying illegal drugs, with the video passed to the Mail on Sunday. Flowers has since apologised for his actions and Co-op Group chairman Len Wardle has quit with immediate effect.

Cameron said: “The Chancellor will be discussing with the regulators the appropriate form of inquiry. There are clearly a lot of questions that need to be answered.

“Why was Reverend Flowers judged suitable to be chairman of a bank? Why weren’t alarm bells rung earlier, particularly by those who knew? It will be important that if anyone does have information they provide it to the authorities.”

The Co-op Bank has become a political football since the weekend with the parties trading blows over Labour’s links to the Co-op Group and whether the Government lent political support to the bank’s bid for Lloyds Banking Group branches.

Independent financial consultant Richard Hobbs says: “Leaving aside the drugs revelations, the fact that a Methodist minister with no knowledge of banking was allowed to preside over a bank is very strange.”

Former FSA head of ethics David Jackman says the approved persons regime “has been too easy for too long”.

He adds: “The FCA is applying tougher criteria but still needs to do more to probe senior individuals.”

Treasury select committee chairman Andrew Tyrie said this week the regulator’s process for vetting bankers had been “a complete disaster”.

TSC member Mark Garnier says: “The guy is clearly incompetent. Forget the drugs stuff, when we interviewed him he didn’t even know the size of the Co-op Bank’s balance sheet.

“The Treasury committee will be asking how the hell the regulator signed this guy off. He was clearly way, way out of his depth.”

A spokesman for the FCA says: “Paul Flowers underwent the appropriate interview process when originally coming onto the Co-op board.

“The FCA supports the proposal by the Parliamentary Commission on Banking Standards to introduce a senior persons regime.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Oh come on Dave, you don’t need an expensive inquiry into what’s gone on !!!

    It not what you know its who you know, you even knighted one of them, who will probably be excused a good telling off as he is off sick (poor lad)

    And who pray tell is going to pay for said inquiry ? as you probably know its us poor sods !!!

  2. The echoing cry of all former regulators is “give us more powers”.

    The FCA is unregulated and unaccountable and has more power than HMR&C and any other sanctioned body.

    The powers are already there but must be used capably by suitably astute people.

    This is the secret of effective regulation. Exchanging the handgun for a bazooka is not a workable or appropriate option.

  3. There is a very defined link to who is auditing these banks KPMG !!!

    Is some-one going to sit Griffiths-Jones down, and ask how the hell KPMG signed off Co-op and HBOS and failed to spot the problems they had ?

    I wouldn’t have thought so, this may upset the merry-go-round of bank to regulator to auditor, any way you cut it the whole lot stinks !

    Sorry Alan the powers of the regulator has nothing to do with it, it is the inbreeding and endless personal money making greed of the individuals, who do deals to aid their own progress up the greasy pole, one very important point is !! what qualifications do any of these morons have that makes them suitable to head up or be employed in such high positions in the regulator, auditor or banks ?

    And if David Cameron cant see this then he is an “idiot” I very much doubt that is the case; so he is as much to blame as any-one,

    Come on MM do some proper reporting you need to ask some very awkward questions !!!!

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