Government set to probe Flowers’ Co-op appointment

CHANCELLOR George Osborne is to order an independent inquiry into how disgraced Paul Flowers was deemed a suitable chairman of the Co-op Bank.

The probe is also expected to examine whether the bank’s recent leadership crisis has had any financial impact on its customers.

Its exact terms of reference and the name of its chair are likely to be formally announced in coming days, Downing Street sources said.

Mr Flowers, 63, apologised after he was filmed allegedly buying drugs, other embarrassing revelations have emerged about his private life since the weekend.

The inquiry into the Co-op is expected to be overseen by the Prudential Regulation Authority.

It cannot begin though until the police have concluded their investigation – West Yorkshire Police searched Rev Flowers’ Bradford home on Tuesday.

Treasury Select Committee chairman Andrew Tyrie said regulators had been considering an investigation into Mr Flower’s role at the bank for “some weeks”.

“It must be independent and independent of the regulators, who themselves may have questions to answer. I’m not saying they do but they could do,” he said.

Yesterday the Flowers scandal was a topic for fierce debat at Prime Minister’s Question Time.

Prime Minister David Cameron said Labour knew about his “past” before the drugs and pornography claims emerged.

Mr Cameron said the government’s first priority was to safeguard the Co-op Bank and ensure its customers and bondholders were protected, but the prime minister went on to question Mr Flowers’ suitability for the role and his links with Labour.

“Why was Reverend Flowers judged suitable to be chairman of a bank? Why weren’t alarm bells rung earlier, particularly by those who knew?” he said.

Business Secretary Vince Cable said yesterday the appoitment of Mr Flowers as the chairman of the Manchester-based lender was a “serious failure of regulation.”