Treasury inquiry announced into Co-op Bank turmoil as Paul Flowers bailed

It could produce uncomfortable findings for both last Labour government and current Coalition

An independent Treasury inquiry into the turmoil at the Co-operative Bank, including the appointment of Paul Flowers as its chairman, was announced tonight by Chancellor George Osborne.

As it will cover the last five years, it could produce some uncomfortable findings for both the last Labour government and the current Coalition administration.

The move followed the arrest of Mr Flowers, a 63-year-old Methodist minister, in connection with claims he bought and used class A drugs. He was being questioned by West Yorkshire police last night after being arrested in Liverpool and later bailed.

Amid mounting allegations about his private life, he has been suspended by the church and the Labour party, which he represented as a councillor until 2011 when "inappropriate but not illegal adult content" was found on his council computer.

Labour and the Tories have traded accusations over who was responsible for the bank coming to the brink of collapse because of a £1.5bn black hole in its finances.

The Treasury inquiry will range across how the bank ran up vast losses, its ill-fated merger with the Britannia Building Society in 2008, its failed attempt to acquire Lloyds branches seven months ago and how appointments were made to senior positions.

The probe will be led by an independent person appointed by the City regulators, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).

It will add to an investigation planned by the PRA and the FCA into whether there were adequate systems and controls in place to prevent the crisis at the bank.

It will also consider whether there was any wrongdoing by individuals, which could lead to fines and censures.

David Cameron has denounced the links between the bank, Mr Flowers and the Labour party. Tories have also pointed to connections between the Co-op and Ed Balls, the shadow Chancellor.

Ed Miliband, the Labour leader, retorted yesterday, accusing the Prime Minister of "cheap political points" and "unjustified smears".

Labour also seized upon a comment by the former Tory minister David Davis that Mr Osborne and the Treasury had "serious questions to answer" about the oversight of the bank in connection with its attempted acquisition of Lloyds branches.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Wayne’s estate faces a claim for alleged copyright breaches
John Wayne's heirs duke it out with university over use of the late film star's nickname
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
books
News
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
News
business
News
Mick Jagger performing at Glastonbury
people
Sport
Germany's Andre Greipel crosses the finish line to win the sixth stage of the Tour de France cycling race over 194 kilometers (120.5 miles) with start in Arras and finish in Reims, France
tour de franceGerman champion achieves sixth Tour stage win in Reims
Extras
indybest
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
News
people
Arts and Entertainment
Chocolat author Joanne Harris has spoken about the financial struggles most authors face
books
Arts and Entertainment
filmSir Ian McKellen will play retired detective in new film
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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 General

E-Commerce Developer

£45000 - £60000 per annum + competitive: Progressive Recruitment: Exciting opp...

Technical Support Analyst (C++, Windows, Linux, Perl, Graduate)

£30000 per annum: Harrington Starr: A global leader in trading platforms and e...

Junior IT Consultant (SQL, Java, C++, Oracle, Graduate)

£28000 per annum: Harrington Starr: A fast growing consultancy to the financia...

Technical Support Analyst (Windows, Linux, Unix, Graduate)

£30000 per annum: Harrington Starr: Technical Support Analyst - Liverpool Stre...

Day In a Page

The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

Hollywood targets Asian audiences

The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

Grindr founder Joel Simkhai: 'I've found love on my dating app'

Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

Is it time to ditch autocorrect?

Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
10 best girls' summer dresses

Frock chick: 10 best girls' summer dresses

Get them ready for the holidays with these cool and pretty options 
Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

Westminster’s dark secret

Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

A History of the First World War in 100 Moments

Dulce et decorum est: a life cut short for a poet whose work achieved immortality
Google tells popular music website to censor album cover art in 'sexually explicit content' ban

Naked censorship?

The strange case of Google, the music website and the nudity take-down requests
Howzat! 8 best cricket bats

Howzat! 8 best cricket bats

As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

David Luiz falls from leader figure to symbol of national humiliation

Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil