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Co-op Bank to face independent inquiry, says PM David Cameron Co-op Bank to face independent inquiry, says PM David Cameron
(35 minutes later)
Chancellor George Osborne is to order an independent inquiry into how Paul Flowers was deemed a suitable chairman of the Co-op Bank.Chancellor George Osborne is to order an independent inquiry into how Paul Flowers was deemed a suitable chairman of the Co-op Bank.
The inquiry is also expected to examine whether the bank's recent leadership crisis has had any financial impact on its customers.The inquiry is also expected to examine whether the bank's recent leadership crisis has had any financial impact on its customers.
Its exact terms of reference and the name of its chair are likely to be formally announced in coming days.Its exact terms of reference and the name of its chair are likely to be formally announced in coming days.
Mr Flowers, 63, apologised after he was filmed allegedly buying drugs.Mr Flowers, 63, apologised after he was filmed allegedly buying drugs.
The Methodist Church said Mr Flowers had been "suspended indefinitely" from his post as a minister.The Methodist Church said Mr Flowers had been "suspended indefinitely" from his post as a minister.
He had stepped down as chairman of Co-op Bank and as deputy chairman of Co-op Group in June.He had stepped down as chairman of Co-op Bank and as deputy chairman of Co-op Group in June.
It has also emerged that he was found to have had "inappropriate" adult images on his computer in 2011 while he was a Labour councillor in Bradford. It has also emerged that he was found to have had "inappropriate" adult images on his computer in 2011 while he was a Labour councillor in Bradford and before he was appointed chair of governors at a primary school in Bradford.
'Alarm bells' A council spokeswoman noted that the material was not illegal, but Glen Miller, leader of the Conservative group at Bradford Council, said: "Apparently no-one thought it sensible to inform the local school of the material that was found on his computer."
The inquiry into the Co-op is to be ordered by the chancellor and arranged by the Prudential Regulation Authority, under powers Mr Osborne obtained in the 2012 Financial Services Act, the BBC's Robert Peston has reported.The inquiry into the Co-op is to be ordered by the chancellor and arranged by the Prudential Regulation Authority, under powers Mr Osborne obtained in the 2012 Financial Services Act, the BBC's Robert Peston has reported.
"This would be a long and detailed investigation by an independent expert into events at the Co-op Bank," he said."This would be a long and detailed investigation by an independent expert into events at the Co-op Bank," he said.
But this cannot begin until the police have concluded their investigation into the allegations that Mr Flowers bought and used illegal drugs, including cocaine, our correspondent added.But this cannot begin until the police have concluded their investigation into the allegations that Mr Flowers bought and used illegal drugs, including cocaine, our correspondent added.
West Yorkshire Police officers searched Mr Flowers' Bradford home on Tuesday.West Yorkshire Police officers searched Mr Flowers' Bradford home on Tuesday.
The Financial Conduct Authority is also thinking about launching another, separate investigation, into whether the bank broke City rules, our correspondent said - which also would need to be completed before the independent investigation could start.The Financial Conduct Authority is also thinking about launching another, separate investigation, into whether the bank broke City rules, our correspondent said - which also would need to be completed before the independent investigation could start.
"If you put all this together, it means that this bank, which is in the throes of trying to save itself, will be under a cloud of investigation for months - it could be years," he concluded."If you put all this together, it means that this bank, which is in the throes of trying to save itself, will be under a cloud of investigation for months - it could be years," he concluded.
The former Bradford councillor, who has been suspended from both his church and the Labour Party, said he had been "wrong" and "stupid". The former Bradford councillor and adviser to Mr Miliband, who has been suspended from both his church and the Labour Party, said he had been "wrong" and "stupid".
Earlier in the Commons, Prime Minister David Cameron said Labour knew about his "past" before the drugs and porn claims emerged.Earlier in the Commons, Prime Minister David Cameron said Labour knew about his "past" before the drugs and porn claims emerged.
Mr Cameron had been asked by Tory MP Steve Brine at PM's questions about the "nightmare unfolding" at the bank and the "sense of disbelief" that Mr Flowers was appointed to his role in the first place.Mr Cameron had been asked by Tory MP Steve Brine at PM's questions about the "nightmare unfolding" at the bank and the "sense of disbelief" that Mr Flowers was appointed to his role in the first place.
Mr Cameron said the government's first priority was to safeguard the Co-op Bank and ensure its customers and bondholders were protected, but the prime minister went on to question Mr Flowers' suitability for the role and his links with Labour.Mr Cameron said the government's first priority was to safeguard the Co-op Bank and ensure its customers and bondholders were protected, but the prime minister went on to question Mr Flowers' suitability for the role and his links with Labour.
"Why was Reverend Flowers judged suitable to be chairman of a bank? Why weren't alarm bells rung earlier, particularly by those who knew?" he said."Why was Reverend Flowers judged suitable to be chairman of a bank? Why weren't alarm bells rung earlier, particularly by those who knew?" he said.
But opposition leader Ed Miliband questioned the Conservatives' own ethics, claiming they took money from tax exiles.But opposition leader Ed Miliband questioned the Conservatives' own ethics, claiming they took money from tax exiles.
Mr Miliband hit back with a series of jibes about the people David Cameron "associated with".Mr Miliband hit back with a series of jibes about the people David Cameron "associated with".
He accused the Conservatives of taking £5m from a City firm found whose traders subsequently rigged interest rates. He said the Tories had "taken millions" from tax exiles and had not returned donations made in he 1990s by Asil Nadir, subsequently convicted in 2012 of fraud.He accused the Conservatives of taking £5m from a City firm found whose traders subsequently rigged interest rates. He said the Tories had "taken millions" from tax exiles and had not returned donations made in he 1990s by Asil Nadir, subsequently convicted in 2012 of fraud.
Mr Miliband quoted an ally of Mr Cameron, Planning Minister Nick Boles, who recently argued that potential Conservative voters "don't trust our motives" and said: "The single biggest problem facing the Conservative Party is being seen as the party of the rich."Mr Miliband quoted an ally of Mr Cameron, Planning Minister Nick Boles, who recently argued that potential Conservative voters "don't trust our motives" and said: "The single biggest problem facing the Conservative Party is being seen as the party of the rich."
Mr Boles was "really saying [that] this prime minister is a loser", the Labour leader concluded.Mr Boles was "really saying [that] this prime minister is a loser", the Labour leader concluded.
Since Mr Flowers resigned as its chair, the Methodist preacher and adviser to Mr Miliband on business has been filmed appearing to try to buy cocaine - allegations currently being investigated by the police.
Earlier the PM in the Commons had indicated only that the chancellor would be "discussing with the regulator what is the appropriate form of inquiry" without making definitively clear whether one would be held.Earlier the PM in the Commons had indicated only that the chancellor would be "discussing with the regulator what is the appropriate form of inquiry" without making definitively clear whether one would be held.
The Co-op Group, a major donor to Labour, is investigating the leadership of its bank subsidiary prior to its near-collapse earlier this year.The Co-op Group, a major donor to Labour, is investigating the leadership of its bank subsidiary prior to its near-collapse earlier this year.
A spokesman for the Methodist Church said: "Paul is being offered pastoral care, and we ask for prayers for all involved in this matter."A spokesman for the Methodist Church said: "Paul is being offered pastoral care, and we ask for prayers for all involved in this matter."