FCA grilled for approving 'financial illiterate' to chair Co-op Bank

07 Jan 2014 | 12:07
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Andrew Tyrie MP

The Financial Conduct Authority (FCA) has been grilled by MPs over its decision to approve the appointment of Paul Flowers to chair the Co-operative bank back in 2010.

At a hearing today, the Treasury Select Committee questioned the regulator's decision to approve Flowers' role at the lender, which was rescued last year after running up a £1.5bn capital shortfall.

Treasury Select Committee chairman Andrew Tyrie (pictured) said the regulator's decision to put a "financial illiterate" in charge of its board was a "negligent decision, a very poor decision", according to Reuters.

However, Clive Adamson, director of supervision at the FCA, defended the move.

"I do not think it was a mistake in terms of the decision I made at the time," Adamson said.

"There are lessons to be learned from what happened. Today he would not be approved as we would look for more experience."

Flowers, a Methodist minister with little experience in banking, was interviewed by regulators in 2009 when he joined the Co-op board as a non-executive director. A year later he became non-executive chairman.

The FCA has been forced to launch an investigation into problems at the bank and the probe could lead to fines for the bank and its former directors.

Adamson said when Flowers was appointed, the Co-op had a "somewhat unruly board" of 22 members and that it was important to have someone in place to better chair it.

"My view was Flowers did have the competence to perform the role of non-executive chairman," Adamson said. "Our view is that a non-executive chairman does not run the bank but run the board."

Categories: InvestmentRegulation

Topics: FcaTreasuryCo-operative bankRegulation

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