The disgraced former Co-operative Bank boss Paul Flowers has been banned from the financial services industry by the City watchdog for inappropriate use of the bank’s phone and computer systems to access premium-rate chat lines and trade sexually explicit messages.
The ban comes more than four years after the bank came close to collapse due to a £1.5bn black hole in its accounts. Flowers, a former Methodist minister, was the £132,000-a-year chairman of the “ethical” Co-op bank from 2010 until June 2013, when he stepped down after the full extent of its financial troubles became clear.
The structure of the board was later criticised by the Treasury select committee as “an accident waiting to happen”.
Four months after news of the black hole, secret footage of Flowers emerged that led to him pleading guilty to possession of cocaine, crystal meth and ketamine and acquiring the nickname “the Crystal Methodist”.
The Financial Conduct Authority said it had only investigated Flowers’ use of company technology and his drug convictions, and not his role in the near-collapse of the bank. However, the Treasury immediately announced that it has launched a new independent review into supervision of the Co-operative Bank between 2008 and 2013.
In its ruling on Tuesday, the FCA said that Flowers’ conduct demonstrated a “lack of fitness and propriety” required to work in financial services.
Mark Steward, its executive director of enforcement and market oversight, said: “The role of chair occupies a unique place of trust and influence. The chair is pivotal in setting expectations of a company’s culture, values and behaviours.
“Mr Flowers failed in his duty to lead by example and to meet the high standards of integrity and probity demanded by the role. These high standards are what the financial services industry and the wider community rightly expect of its senior individuals.”
The FCA found that Flowers demonstrated an “unwillingness to comply” with its and other legal, regulatory and professional requirements and standards, as its investigation found that he had used his work mobile phone to make “a number of inappropriate calls to a premium-rate chat line”, in breach of Co-operative Group and Co-op bank policies.
In addition, he used his work email account to send and receive “sexually explicit and otherwise inappropriate messages, and to discuss illegal drugs”, the FCA added, despite having been warned about his earlier misconduct.
Following the scandal, Flowers was also removed from the list of Methodist Church ministers, stripped of the title reverend and the power to lead services for “seriously impairing the mission, witness or integrity of the church”.
Nicky Morgan, the chair of the Treasury select committee, said she had written to Andrew Bailey, head of the FCA, last week to ask why an investigation into the Co-op bank had still to begin.