A former boss of the Co-operative Bank has admitted misconduct and agreed to pay out £20,000 to the Financial Reporting Council (FRC).
Barry Tootell, the chief financial officer and chief executive of the Co-Operative Bank between 2009 and 2013, was accused of not exercising due skill, care and diligence in managing the firm for which he was responsible and failing to take reasonable care to organise and control its affairs responsibly and effectively.
Tootell has been excluded as a member of the Institute of Chartered Accountants of England and Wales (ICAEW) for six years, and will pay £20,000 towards the FRC’s costs.
Gareth Rees QC said the settlement “sends out a clear message to accountants of the high standards of professional conduct expected of them when undertaking important roles within business”.
“The sanction reflects the significance of the misconduct by a CFO and CEO of a major UK bank, and the need to promote public and market confidence in the accountancy profession and the quality of corporate reporting in this sector.
“Mr Tootell engaged in the FRC’s settlement process by accepting his misconduct which has led to a considerable saving of time and cost.”
Sex, drugs and the Britannia Building Society
In 2013 it emerged the lender had a £1.5bn capital hole in its balance sheet as a result of its merger with the Britannia Building Society, which led to the resignation of chairman Reverend Paul Flowers – who was later uncovered buying crystal meth from a rent boy, leading to him being given the unfortunate nickname “Crystal Methodist”.
In the end, two US hedge funds, Aurelius and Silverpoint Capital, helped the lender by taking a 70 per cent stake.
City watchdogs get tough
Tootell resigned from the Co-op in 2013 following a six-notch downgrade by ratings agency Moody’s to so-called junk status.
In January this year, Tootell and former colleague Keith Alderson, who had been the managing director of its corporate and business banking division, were both banned from holding senior City positions by the Prudential Regulation Authority (PRA).
At the time the PRA said Tootell did “not take adequate steps to ensure that the Co-op Banking Risk team, for which he was ultimately responsible, was properly structured and organised to enable it to provide proper independent challenge and guidance to the first line business for the Co-op Bank”.
What the Co-op said
In a statement today, said: “As with previous reviews of a regulatory nature, the FRC’s statement highlights serious shortcomings in the way the Bank was managed in the past and, as we have said before, the investigations by the regulators into what went wrong at the Bank are very important. They indicate the extent of the previous problems at the Bank and emphasise that the turnaround is a lengthy and difficult process.
“The findings relate to previous management and the current management team has, over the last three years, progressed the turnaround, having raised additional capital, achieved considerable de-risking, delivered mobile and digital banking capability and strengthened the Bank’s appeal to customers.”