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Osborne confirms Co-op Bank probe Co-op Bank: Chancellor George Osborne confirms inquiry
(35 minutes later)
Independent inquiry into events at Co-op Bank confirmed by UK chancellor An independent inquiry into events at the Co-op Bank has been confirmed by Chancellor George Osborne.
More to follow. The bank's former chairman, Paul Flowers, 63, has been arrested in Merseyside in connection with a "drugs supply investigation".
The Treasury has not yet announced who will lead the investigation.
It comes after Mr Flowers was suspended from both the Methodist Church, where he was a minister in Bradford, and the Labour Party.
He has been filmed allegedly handing over £300 for cocaine and discussing buying other illegal drugs.
Mr Flowers left his position as deputy chairman of the Co-op Group in June amid concerns about his expenses.
Separately, he was forced out of the Co-op's banking arm because of doubts about his competence for the job.
A Treasury spokesman said: "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."
The chancellor used the Financial Services Act 2012 to order an independent investigation into "events at the Co-op Bank and the circumstances surrounding them".
Separately, the FCA and PRA are considering whether they should launch formal enforcement investigations.
The PRA, part of the Bank of England, said it welcomed the independent inquiry.
"The Prudential Regulation Authority fully agrees that the investigation should be led by an independent person, and looks forward to supporting them in their work," it said in a statement.
"The Prudential Regulation Authority will make its full resources available to support the investigation."