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| Co-op Bank: Chancellor George Osborne confirms inquiry | Co-op Bank: Chancellor George Osborne confirms inquiry |
| (35 minutes later) | |
| An independent inquiry into events at the Co-operative Bank has been confirmed by Chancellor George Osborne. | |
| The bank's former chairman, Paul Flowers, 63, has been arrested in Merseyside in connection with a "drugs supply investigation". | 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. | The Treasury has not yet announced who will lead the investigation. |
| It comes after Mr Flowers was suspended from both the Methodist Church, of which 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. | He has been filmed allegedly handing over £300 for cocaine and discussing buying other illegal drugs. |
| Mr Flowers resigned from 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 in June because of doubts about his competence for the job. | |
| Conduct of directors | |
| 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. | 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." | "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". | 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". |
| This will date from 2008 and include the conduct and appointment if directors. | |
| Separately, the FCA and PRA are considering whether they should launch formal enforcement investigations. | 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 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 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." | "The Prudential Regulation Authority will make its full resources available to support the investigation." |
| Internal review | |
| The Co-op is seeking to recover money paid to its former chairman who has been told to hand back £31,000. | |
| The bank is also looking at emails and other evidence as part of an "internal fact-finding review". | |
| The Mail on Sunday published a video of Mr Flowers allegedly paying for and discussing recreational drugs | |
| Labour has sought to distance itself from Mr Flowers, as a political row developed over why he was allowed to reach a such high position in the bank. | |
| Until 2011 he was a Labour councillor in Bradford and subsequently served the party on what it says was an informal advisory group. | |
| The Methodist Church said it had offered "pastoral care" to Mr Flowers, who is indefinitely suspended as a minister. | |
| It has emerged that he resigned from running drugs charity Lifeline in 2004 after allegedly lodging false expenses claims. | |
| The Charity Commission said it received a complaint at the time but had no evidence that Mr Flowers "acted in bad faith or fraudulently". |