The Chancellor of the Exchequer is to use the powers he has brought in under the Financial Services Act 2012 to order an independent investigation into events at the Co-op Bank and the circumstances surrounding them.
The investigation has been jointly agreed with the two regulators – the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) – who agree there is a public interest in a statutory investigation.
It will be led by an independent person appointed by the regulators, with the approval of the Treasury.
Separately, the FCA and PRA have today announced they are both considering whether they should also launch formal enforcement investigations.
The independent investigation under the Financial Services Act will therefore not start until it is clear it will not prejudice any actions the relevant authorities may take, including the potential FCA and PRA enforcement investigations.
The detailed direction that will order the independent investigation and set out its terms will take into account any issues arising, including from this potential FCA and PRA enforcement investigations and be determined in consultation with the independent person appointed to lead it. It will cover the actions of relevant authorities (regulators and government) and the institution itself, including prudential issues, governance (including the appointment of senior staff) and acquisitions. The period that the investigation will review will start from at least 2008 and run to at least the present time.
The direction and the investigation’s report will be laid before Parliament.
The government is determined to create a stronger and safer banking system. A key part of this is reforming the regulatory regime for senior managers. That is why the government’s Banking Reform Bill, which is currently passing through the House of Lords, will introduce a new senior managers’ regime, subjecting decision makers in banks to higher standards that means if they fail in their duties they will be held to account.