Following the Financial Conduct Authority’s (FCA) announcement that it has now concluded its enforcement investigations into the Co-op Bank and related individuals, I have today laid a direction before Parliament requiring the Prudential Regulation Authority (PRA) to carry out an independent review into the prudential supervision of the Co-operative Bank between 2008 and 2013, using powers under section 77 of the Financial Services Act 2012.
In November 2013, the then Chancellor of the Exchequer announced the Government’s intention to direct the regulators to launch an investigation into the events at the Co-operative Bank, following its withdrawal from the bidding process to purchase 632 bank branches from Lloyds Banking Group — known as Project Verde. It was stated at the time that this review would not take place until the conclusion of all regulatory enforcement action relating to the Co-operative Bank. Today’s announcement by the FCA means that this has now happened.
The review will look at the actions, policies and approach of the Financial Services Authority, and latterly the PRA, as the institutions with statutory responsibility for the prudential supervision of the Co-op Bank during the period in question. It will focus on the outstanding questions identified by the House of Commons Treasury Committee in its 2014 report ‘Project Verde’ (HC 728-I). As recommended by the Committee, the review will have access to all relevant documents and correspondence, including the record of Government contacts concerning the Lloyds “Verde” bidding process.
I have approved the PRA’s appointment of Mr Mark Zelmer to carry out the independent review on its behalf. The review is expected to run for 12 months, after which HM Treasury will publish a report of the review’s findings. A copy of this report will be laid before Parliament.
The Government are committed to creating a stronger and safer banking system. A vital part of this is ensuring that our regulatory system can learn from past events. The launch of this independent review is a further demonstration of this commitment.