Watchdog defends Co-op Bank boss decision

THE man who backed the appointment of the former Co-op Bank chairman Paul Flowers has told MPs he “stands by the decision.”

Speaking to the Treasury Committee, Clive Adamson, director of supervision at the Financial Conduct Authority (FCA), who interviewed him in 2010 for the post of non-executive chairman, said he knew Mr Flowers did not have any experience in banking but said the right decision was made at the time.

Co-op Bank was rescued last year under a deal with bondholders, and suffered another blow when Mr Flowers’ arrest for alleged drugs offences hit the headlines.

Mr Flowers, who is from Bradford, joined the Co-op board in 2009 as a non-executive director.

Mr Adamson said Mr Flowers’ lack of experience in banking did not matter, as his job was to control the board of the bank.

The chairman of the Treasury Committee, Andrew Tyrie said the regulator’s decision to put a “financial illiterate” in charge of its board was a “negligent decision, a very poor decision”.

But Mr Adamson said he had attempted to make up for Flowers’ lack of financial experience by appointing two deputies.

He said that no-one had told the regulator about the drugs allegations.

“I don’t think it was a mistake in terms of the decision I made at the time,” he said. “I do regret what subsequently happened.

“Today he wouldn’t be approved as we would look for more experience.”

Investigations into problems at the Co-op Bank have been launched by the Bank of England’s Prudential Regulation Authority and the FCA.

The PRA said it would look into events at the bank that led to it needing a £1.5bn rescue, and the role played by senior managers.

The FCA said its investigation would “look at decisions and events up to June 2013”.

The action could lead to significant fines and bans for senior directors if they are found to have breached the rules.

Regulators first raised the prospect of investigations after the bank admitted it had a capital shortfall of £1.5bn.