James Moore: Will the FCA investigate the Co-op? It must make its position clear

Outlook It is often noted that the Co-op Bank is the first to get into difficulties without having to call on the taxpayer for cash. By contrast to the earlier bailouts of Royal Bank of Scotland, HBOS, Northern Rock, Bradford & Bingley (what a long and sorry testament that list is to the UK banking industry), Co-op Group and the bank's bondholders are footing the bill for the debacle.

Bondholders in those other banks didn't bear any of the consequences of their failure, and that left a nasty taste in the mouth, given how many schools and hospitals went into bailing them out. So, with taxpayers off the hook, Co-op demonstrates that the new, tough regulatory set up works, right?

Up to a point. You see, the other thoroughly unsatisfactory consequence of the way what happened to that long list of failed banks was handled is that no one was held accountable.

Some executives and directors lost their jobs, it's true, but they left with enormous pensions and many subsequently grabbed new roles with indecent haste.

Now, yesterday Jesse Norman, the Conservative MP, read out several very bullish statements made by the Co-op in its annual report, and also highlighted an interview given by group chairman Len Wardle, which suggested that all was rosy in the bank's garden during Co-op Bank's failed attempt to take over Verde (now TSB) from Lloyds.

Was a false market created in the bank's bonds as a result? It's certainly a question people who invested in those bonds have a right to ask.

Neville Richardson, the former chief executive of the bank, has testified that Andrew Bailey, now head of the Prudential Regulation Authority, had twice contacted Co-op to raise concerns about Co-op Bank's capital before Mr Wardle's interview.

Of course, Mr Richardson has his own agenda. He wants us to believe he was on the side of the angels and that there were not problems with the loan book of Britannia Building Society (which he brought to the Co-op when the two merged) while he was in charge. It has been identified as a major contributor to Co-op Bank's woes.

Really, the only thing that is completely clear about this story is that it is getting murkier by the day.

As the bank prepares to list on the London Stock Exchange, some clarity is urgently required.

I spoke to Martin Wheatley just before the launch of the Financial Conduct Authority and was impressed. He said all the right things, and he pointed to some notable incidents yesterday where the FCA has proved willing to intervene and where its predecessor, the Financial Services Authority, might have sat on its hands.

However, while he said the FCA would investigate events at Co-op if there were sufficient grounds to do so, and that he would take seriously points raised by Mr Norman, he really needs to do more than that.

There should be no equivocation. Given the mounting controversy, this is one occasion where the FCA should clarify its position with regard to an investigation. Because the credibility of Britain's regulatory system is again at stake.

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Guru Careers: Graduate Editor / Editorial Assistant

£16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Day In a Page

Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

Please save my husband

As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada
Birthplace of Arab Spring in turmoil as angry Tunisians stage massive sit-in over lack of development

They shall not be moved: jobless protesters bring Tunisia to a halt

A former North African boom town is wasting away while its unemployed citizens stick steadfastly to their sit-in
David Hasselhoff's new show 'Hoff the Record': What's it like working with a superstar?

Hanging with the Hoff

Working with David Hasselhoff on his new TV series was an education for Ella Smith
Can Dubai's Design District 'hipster village' attract the right type of goatee-wearing individualist?

Hipsters of Arabia

Can Dubai’s ‘creative village’ attract the right type of goatee-wearing individualist?
The cult of Roger Federer: What is it that inspires such obsessive devotion?

The cult of Roger Federer

What is it that inspires such obsessive devotion?
Kuala Lumpur's street food: Not a 'scene', more a way of life

Malaysian munchies

With new flights, the amazing street food of Kuala Lumpur just got more accessible
10 best festival beauty

Mud guards: 10 best festival beauty

Whether you're off to the Isle of Wight, Glastonbury or a local music event, we've found the products to help you
Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf