Co-op Bank boss Paul Flowers was right choice at the time, says watchdog

The watchdog who waved through the appointment of the "financial illiterate" Paul Flowers as chairman of the beleaguered Co-operative Bank told MPs yesterday that he stood by the decision and insisted it was "not a mistake".

Clive Adamson, now director of supervision at the Financial Conduct Authority, led a three-man panel that approved the appointment after a 90-minute interview. He told MPs on the Treasury Select Committee, who looked on aghast: "I stand by the decision I made at the time."

Mr Flowers, a Methodist minister who had no senior banking experience, was filmed allegedly buying drugs after his resignation, and was found to have stored "inappropriate but not illegal" material on a laptop while a Bradford councillor. Other lurid allegations followed.

Mr Adamson, a senior regulator at the Financial Services Authority when Mr Flowers was hired, said: "I'm as surprised as all of us at … Mr Flowers' apparent misdemeanours. Do I regret what subsequently happened? Yes I do.

"At no time did anyone in the firm, or in public life [who may have known about Mr Flowers' behaviour], ever alert us to these matters."

The three-man panel also included Graham Hardie, who subsequently joined Co-op Bank as a non-executive director. They were aware of Mr Flowers' spent conviction, dating back to 1981, for gross indecency but did not view that as relevant to the appointment.

However, Andrew Tyrie, the committee chairman, said that following Mr Flowers' bumbling appearance before MPs, when he was unable to answer basic questions about the bank, it "didn't take us long" to realise he was unsuitable. He described Mr Adamson's "judgement call" as "completely wrong".

But Mr Adamson said: "I was surprised at the answers he gave. At the time [we met him] he was much more cogent. It was not the same individual I saw in 2010. He did appear to grasp the issues."

Challenged on Mr Flowers' lack of banking experience, Mr Adamson said the chairman's job was to "run the board, not run the bank".

"I did explore his experience, together with why he was being put forward. At that time, the reason that he was proposed and put forward was the board of the Co-op Bank was made up of 22 individuals. It was a somewhat unruly board and it was important someone was put in place to better chair it.

"My view was that at the time Paul Flowers did have the competence to be non-executive chairman."

Mr Tyrie put it to him that the "approved persons regime" operated by the FSA was a "box-ticking exercise" and a "busted flush".

Mr Adamson replied: "I would describe part of it as a box-ticking exercise … We did make improvements but we acknowledge that more needed to be made."

It also emerged during the hearing that the two deputy chairmen appointed along with Mr Flowers, because they had banking experience, had voted against the attempt to take on Verde – the business of more than 600 branches being sold by Lloyds Banking Group. Rodney Baker-Bates visited Mr Adamson himself in 2012 to warn that the proposed deal was a "step too far". He and his fellow deputy chairman, David Davies, are no longer with the bank.

The inquiry is one of six either announced or under way into the bank's near failure.

Questions were also raised about the disastrous merger with Britannia Building Society. Its corporate loan book is largely blamed for the £2bn black hole in the Co-op bank's accounts.

Mr Adamson said there was political support for the deal, but denied that there had been any interference.

News
Monkey business: Serkis is the king of the non-human character performance
peopleFirst Gollum, then King Kong - now the actor is swinging through trees in Dawn of the Planet of the Apes
Arts and Entertainment
Blackman: Landscape of children’s literature does not reflect the cultural diversity of young people
booksMalorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Sport
Thiago Silva pulls Arjen Robben back to concede a penalty
world cup 2014Brazil 0 Netherlands 3: More misery for hosts as Dutch take third place
Sport
Robin van Persie hands his third-place medal to a supporter
Van Persie gives bronze medal to eccentric fan moments after being handed it by Blatter
PROMOTED VIDEO
News
Ian Thorpe had Rio 2016 in his sights
people
Arts and Entertainment
Curtain calls: Madani Younis
theatreMadani Younis wants the neighbourhood to follow his work as closely as his audiences do
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

News
scienceScientists have developed a material so dark you can't see it...
Voices
Mrs Brown's Boy: D'Movie has been a huge commercial success
voicesWhen it comes to national stereotyping, the Irish know it can pay to play up to outsiders' expectations, says DJ Taylor
Life and Style
Douglas McMaster says the food industry is ‘traumatised’
food + drinkSilo in Brighton will have just six staple dishes on the menu every day, including one meat option, one fish, one vegan, and one 'wild card'
Life and Style
Once a month, waistline watcher Suran steps into a 3D body scanner that maps his body shape and records measurements with pinpoint accuracy
techFrom heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
News
Soft power: Matthew Barzun
peopleThe US Ambassador to London, Matthew Barzun, holds 'jeans and beer' gigs at his official residence. He says it's all part of the job
Sport
Joe Root and James Anderson celebrate their record-beaking partnership
cricketEngland's last-wicket stand against India rewrites the history books
News
Gavin Maxwell in Sandaig with one of his pet otters
peopleWas the otter man the wildlife champion he appeared to be?
News
Rowsell says: 'Wearing wigs is a way of looking normal. I pick a style and colour and stick to it because I don't want to keep wearing different styles'
peopleThe World Champion cyclist Joanna Rowsell on breaking her collarbone, shattering her teeth - and dealing with alopecia
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

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over the northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

Otter man Gavin Maxwell's bitter legacy

The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

Joanna Rowsell: 'I wear my wig to look normal'

The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

Bill Granger's quick and delicious marinades

Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport