Treasury orders Co-operative Bank failures review
Chancellor George Osborne has put new regulatory powers into practice to investigate the near-collapse of the Co-operative Bank.
The new powers under the Financial Services Act have allowed the chancellor to order an inquiry into the failings of the bank and into the appointment of scandalised chairman Paul Flowers. The review will come in addition to the current investigation being undertaken by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
In addition to its appointment procedures, investigators will look as far back as 2008 to determine the Bank’s flaws which have led to its credit rating being slashed in May 2013 as well as the £1.5 billion gap which has emerged in the Bank’s finances.
The period of time which will be examined has led to speculation that, in addition to the coalition Government, some Labour Party ministers are set to face embarrassment over their dealings with the Co-operative.
The Co-operative Group has been mired in scandal recently, owing to allegations of drug use by its former banking chairman, Paul Flowers. Mr Flowers – who has had both his role as Minister and Labour Party membership suspended in the wake of these allegations – was arrested last Thursday. Police say he is being held regarding “an ongoing drug supply investigation”.
Senior Tory MP David Davis – who fought David Cameron for leadership of the Conservative Party – said that the Treasury has “serious questions to answer” about its overseeing of the bank. Concerns, which were raised when the bank launched a takeover bid of Lloyds Bank branches, “were apparent to a rival and would have been – with a bit of work – to anyone else,” he continued.
The Treasury has released a statement saying that its financial regulators were in agreement that it was in the public interest to launch a statutory investigation.
Chairman of the Treasury Select Committee, Andrew Tyrie, added: “A comprehensive independent inquiry is much needed…. problems appear to have developed over many years.”