View more on these topics

FCA investigates Co-op directors over £1.5bn capital shortfall

The Financial Conduct Authority is investigating the role of former senior directors at the troubled Co-operative Bank, according to reports.

Co-op’s senior executives have faced a series of grillings by the Treasury select committee in recent months over a failed deal to buy 632 Lloyds Banking Group branches, known as ‘Project Verde’, and a £1.5bn capital shortfall.

Conservative MPs have also attacked the FSA for approving former Co-operative Bank chairman Reverend Paul Flowers (pictured).

The former Labour councillor was caught on video by the Mail on Sunday buying crystal meth and crack cocaine.

The Telegraph reports the FCA is investigating roles of senior individuals in the run-up to the capital shortfall being uncovered in June 2013.

According to the paper, the probe is focusing on whether there were any regulatory breaches by the directors in relation to the regulatory capital position of the bank and the way that provisions were accounted for in relation to loan impairments.

Yesterday, Prime Minister David Cameron called for a regulatory inquiry into the appointment of  Flowers.

Speaking at Prime Minister’s Questions yesterday, he 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.”


News and expert analysis straight to your inbox

Sign up


There are 7 comments at the moment, we would love to hear your opinion too.

  1. Will names be named and will any individuals held to account? The people at the FSA who oversaw this failure, regardless of whether they now work for the FCA, must not be allowed to shield those responsible simply by describing it as “collective”, as did Hector Sants when he appeared before the TSC back in March 2011. If they are, then we’ll be no further forward than we were in the wake of the 2008 banking crisis.

    This is yet another example of why the industry needs an Independent Regulatory Oversight Committee with real teeth and real enforcement powers against those individuals who are found to have failed to discharge properly their regulatory responsibilities.

  2. That’s a lot of Rent Boys, crack cocaine, poppers, booze, GBH and porn videos. What a filthy man.

  3. Co-op paid KPMG 7.5 million last year in fees !!! KPMG say their audit process was robust,, hahahahahahaha F@@ki+g ha !!!

    Wonder what Griffith-Jones has to say ? or is he still hoarse from the HBOS debacle !!

    Don’t worry John just wait for the merry-go-round to stop and you will be able to secure another high ranking job with a bank or auditor again !!

  4. Another question that the needs to be put to and answered without equivocation by those supposedly in charge at the FSA is why did they fail to take action on the Co-op’s looming £1.5Bn black hole? Didn’t they or their underlings see it coming? Surely the banks are required periodically to submit data equivalent to the cursed GABRIEL returns demanded of intermediaries? What, if anything, is done with all this data? Or is it just yet another regulatory box-ticking exercise that, as in this case, serves no practical or useful purpose to avert calamity? Griffiths-Jones has described the purpose of the GABRIEL returns as “pragmatic” data collection. But what does that actually mean and what is its purpose if nothing’s actually done with it?

    One might reasonably expect that lessons would have been learned at Canary Wharf from RBS’s disastrous and self-crippling purchase of ABN Amro which, as has been said by MP’s, the FSA should have blocked. But has the regulator actually become any better or more effective at performing one of its primary functions, namely to prevent such train wrecks before they happen? Or is it still fixated with its own agenda of enforcing the FSA’s RDR, embarking on yet more thematic reviews and increasing its budget yet further? The evidence suggests lamentably not although, to be fair, there hasn’t yet been a train wreck on Martin Wheatley’s watch. Sooner or later, if and when another one unfolds, the time will come when blaming the last lot simply won’t wash. And then what?

  5. “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.”

    Maybe because those vetting him weren’t suitably qualified themselves?

  6. How suitable was Fred Goodwin?

    Something else that should be asked is why the Co-op were leaned on so heavily to take on Britannia’s toxic debts?

  7. @Smithy – Fred had more relevant book qualifications than Hector Sants to be fair.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm