'Moral duty' over Flowers details

A top City regulator has turned the spotlight on a council over the behaviour of disgraced former bank chief Paul Flowers, saying there should have been a "moral duty" to reveal what was known about him.

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The Co-operative Group has launched a fact-finding probe in the wake of the Flowers scandal

A top City regulator has turned the spotlight on a council over the behaviour of disgraced former bank chief Paul Flowers, saying there should have been a "moral duty" to reveal what was known about him.

Andrew Bailey said the reason for Mr Flowers' resignation from Bradford council in September 2011 - because of pornography found on his council computer - was not disclosed at the time.

Mr Bailey, head of the Bank of England's Prudential Regulation Authority (PRA), told the Sunday Telegraph: "We didn't have anything on him."

He added: "I feel worried there are other organisations out there who knew things about him and didn't say.

"When he stepped down from Bradford Council he told us it was to spend more time with the bank. Of course what he didn't tell us was why he was stepping down because it was never revealed.

"That is something that is of concern to me. This is a personal view but the whole idea that you can do deals with people so they can neatly shuffle off the scene when there is a different story behind [it] is something I think is very difficult.

"I think there is a moral duty. If I was in that situation it would be on my conscience."

Bradford Council reportedly declined to comment.

Mr Flowers, who was chairman of the Co-operative Bank for three years from 2010, resigned as a Labour councillor in September 2011 after almost a decade, at the time citing personal reasons and responsibilities at the Co-op.

But, after a drugs scandal engulfed the former Methodist minister earlier this year, it emerged that the resignation came after the discovery of a pornographic material on his council laptop.

Chancellor George Osborne has launched an independent investigation into the troubled period at the bank which eventually saw it having to undergo a traumatic restructuring after a £1.5 billion hole was found in its finances.

The takeover of Britannia Building Society and abortive attempts to buy hundreds of Lloyds Bank branches have been widely blamed for the collapse.

Details about the behaviour of Mr Flowers have now raised questions about his lack of experience and how he could have been appointed to his position, including what role regulators at the Financial Services Authority had.

Mr Bailey joined the FSA in April 2011, after Mr Flowers had been appointed. It was later replaced, with some of its responsibilities given to the new Financial Conduct Authority and others to the PRA.

The Co-operative Group has launched a fact-finding probe in the wake of the Flowers scandal as well as a review of the business by former City minister Lord Myners.

On Friday the bank announced the completion of the main plank of its rescue plan after the black hole was discovered on its balance sheet.

It sees the Co-operative Group retain a 30% stake in the bank and remain the largest shareholder while ceding majority control to investors including US hedge funds.