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‘No regrets’: FCA defends approval of ex-Co-op chair Paul Flowers

FCA director of supervision Clive Adamson has told MPs he has “no regrets” over approving Reverend Paul Flowers as Co-operative Bank chairman.

Speaking to the Treasury select committee today as part of its inquiry into the Co-op Bank, Adamson described Flowers as “articulate and cogent” and suitable to be a bank chairman in a robust defence of the FSA’s actions.

Flowers became Co-op Bank chair in May 2010 and stepped down in June last year after a £1.5bn capital hole was revealed.

In astonishing evidence given to the TSC inquiry in November, Flowers did not know the size of the Co-op Bank’s balance sheet or how much it was lending.

He was also arrested on drugs allegations after he was filmed buying crystal meth and crack cocaine last year.

As a result, the Co-op Bank is the subject of an Treasury-commissioned independent review, FCA and PRA enforcement investigations and three internal reviews.

Flowers was interviewed just once for an hour and a half in May 2010 by three supervisors including Adamson. Adamson was the most senior individual on the panel as FSA director of the major retail groups division.

In the hearing today, Adamson admitted Flowers did not have the technical expertise to chair a bank. He said to compensate for his lack of knowledge the FSA and Co-op Bank agreed to appoint two deputy chairmen with financial services experience to help Flowers.

Adamson also claimed there are no other examples of a bank chairman having no banking expertise. When questioned by MPs, Adamson said it could be appropriate for a nuclear power station to have a chairman with no nuclear experience or knowledge.

Adamson also dismissed Flowers’ spent conviction for gross indecency in 1981, deeming it irrelevant to his suitability.

He said: “I stand by the decision I made at the time. I was as surprised as all of us about Flowers’ apparent misdemeanours. I don’t think it was a mistake with the information I had at the time.

“The reason he was proposed was that the Co-op Bank board was 22 individuals and an unruly board, and it was important to have someone in place to better chair the board. My view was that Flowers had the competence to perform the role of non-executive bank chairman.”

Adamson he said he made the right decision at time but expressed regret over drug allegations surrounding Flowers and the troubles at the Co-op Bank.

TSC chair Andrew Tyrie described the FSA’s decision to approve Flowers as “pretty catastrophic” and “negligent”.

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. Oh what farce !!!

    I wonder when the TSC will get fed up with the two fingers the FSA/FCA just keep replying with ?

    Just goes to demonstrate how political the FSA/FCA are they are given full immunity for giving the government full deniability.

  2. “No regrets”-is this some kind of joke?

  3. Due diligence not a word the FSA/FCA seem to know unless you are a small IFA

  4. Why should he have any experience, qualifications or expertise?

    After all, you don’t need it to be an Ombudsman – or a regulator for that matter.

  5. Of course the PIA/FSA/FCA has no regrets.

    It has absolutely no accountability.

    Why would you regret anything if you have no accountability?

  6. Is this the outcome of the “lessons learned report” as requested by Mr Wheatley & Mr Bailey? (as recorded in the FCA minutes from November 2013). It seems utterly perplexing that someone without any Banking experience can be granted the role. To be a lowly adviser one needs to pass exams and achieve specific qualifications, to run a major UK bank and have significant influence over a mass market of retail clients, one would appear to require neither experience nor appropriate examinations, this all in the wake of the credit crunch and RDR on the horizon. One can only express surprise and perhaps alarm that Mr Adamson seems to be taking this position, which if extrapolated across our sector would presumably make a mockery of all that we have been working to achieve over the last few years. I think rather more detail and better explanation is required, than they thought a couple of deputies would help him muddle through with an “unruly Board”… to quote your quotation from Mr Adamson. What a disappointing perspective.

  7. Experience shows the Chairman must have relevant experience of the business of which he is in charge. It’s not sufficient to say he only needs to be able to Chair meetings. He or she must have in depth knowledge of the business to be able to steer the directors in the right direction. Anyway I don’t expect the “jobs for the boys” situation to change and it is symptomatic of the problems within corporate business in this country. During the “crisis” I had dinner with a Director of the RBS (a retired accountant). He was complaining of all the extra hours he was having to put in. He did not get any sympathy from me. I pointed out that as a full qualified banker I was prepared to assist on the Board. Needless to say I never received the call! You don’t get these positions because of your qualifications or ability! That’s the big problem in this country.

  8. I have some sympathy here and disagree with the comments that suggest that a Chairman MUST have experience and detailed understanding of the industry in which that business operates. Certainly for the largest organisations the skills required of a chairman are much more than being able to understand the detail. It is about managing the board, external stakeholders/shareholders and ensuring that the CEO follows the plan and remains in line. It is not to be the CEO (in fact that is the worst type of chairman).

    If you look at the current FTSE100 you will see that the Chairs are from wide and varied backgrounds.

  9. Well Bert you will NEVER convince me of the wisdom of your argument. However by even submitting comment here I have broken my New Year resolution not to contribute to such forums. I am going to revert to that resolution and concentrate on making my business successful and not caring about the activities or opinions of others. That’s also how you get “honours”. So I look forward to getting a knighthood for doing my job and making lots of money for myself.

  10. James Harrington 7th January 2014 at 2:51 pm

    The good news is that the PRA seem to take things a bit more seriously. After all, they apparently were “minded to reject” Oliver Tant as the new Chief financial Officer of Legal & General (lack of experience in Insurance) which led to him not taking (or being offered?) the role last year.

    And to remind you, Tant is an accountant, with 20 years at KPMG, previously head of audit and head of Private equity. I’m not sure what additional experience you need for a CFO, but on the basis he’s now at Imperial Tobacco I’m guessing he must be a heavy smoker with no life insurance..

  11. GP Styles (GPS Economics) 7th January 2014 at 3:37 pm

    Very reassuring… I am sure!

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