View more on these topics

Regulators censure Co-op for misleading investors

The troubled Co-op Bank has been censured by both the FCA and PRA for misleading investors over its capital position.

In a joint investigation with the PRA, the FCA also found the bank “fell short of its responsibility to be open with its regulators”.

In addition, the PRA has published the result of its enforcement action against the Co-op. The regulator says the firm’s “three lines of defence” risk management model was “flawed in design and operation”.

These failings occurred between 22 July 2009 and 31 December 2013.

The FCA says under normal circumstances the bank would have been hit with a “substantial” fine.

FCA acting director of enforcement and market oversight Georgina Philippou says: “Firms have a very basic but extremely important responsibility to be transparent with their investors and with us, as their regulator, and Co-op Bank fell short of this. As a result, investors were left unaware of Co-op Bank’s true capital position and we were left in the dark about intended changes to senior personnel at the bank.

“This is a serious matter, but exceptional circumstances mean a public censure is the appropriate and proportionate response. It is vitally important that Co-op Bank’s capital resources are directed towards improving its resilience.”

In its financial statements for the year ending 31 December 2012, published on 21 March 2013, Co-op Bank said: “Adequate capitalisation can be maintained at all times even under the most severe stress scenarios, including the revised FSA “anchor” stress scenario.”

It also insisted a capital buffer was being maintained to “absorb capital shocks and ensure sufficient surplus capital is available at all times to cover…regulatory minimum requirements”.

In reality, from 15 January 2013 – when the regulator had issued revised capital requirements to the bank – it did not have sufficient capital to meet these new requirements, the FCA says.

In addition, the FCA says there was “no reasonable basis” for stating that Co-op had adequate capital in the most severe stress scenarios.

The FCA says investigations into senior individuals at the Co-op Bank during the relevant period are “ongoing”.

Recommended

CaptionCompetition120815

Caption Competition – 12 August 2015

Can you put the boot into your nearest and dearest to win a delicious box of Hotel Chocolat milk chocolates? Submit a witty caption for the photo above and you will be automatically entered into our prize draw. Remember, the funnier it is, the more likely you are to win. What are you waiting for? […]

Rookes-Caroline-MAS-2013-500x320.jpg
1

MAS posts £786k loss as chief exec pay hits £180k

The Money Advice Service has reported a loss of £786,000 for the year 2014/15 and handed chief executive Caroline Rookes a £20,000 pay rise. It marks the first time MAS has made a loss since it was launched in 2010. In that time, levy income has more than doubled from an original take of £32m […]

Building-A-House-Home-Frame-700.jpg
1

Govt creates £36m fund to develop brownfield sites for starter homes

The Government has created a £36m pot to pave the way for the creation of thousands of starter homes for first-time buyers. The fund includes £26m so the Government can identify and purchase brownfield sites and £10m for local authorities to prepare more brownfield land for the development of starter homes. The idea behind the […]

Stephen-Smith-MM-Peach-700.jpg

Analysis: Benign backdrop will aid borrowing

The Council of Mortgage Lenders’ half-year market commentary has much in it to make intermediaries smile. Taken alongside falling unemployment data and a jump in confidence last month based on wage growth and low inflation, the outlook for borrowing ought to be good for many months to come. So despite the CML revising its gross […]

Retirement - thumbnail

Defined benefit schemes: Part 2

Justin Corliss, business development manager In defined benefit (DB) schemes part 1, we looked at recent guidance aimed at DB scheme trustees and sponsors. In part 2 we will look at guidance available to pension transfer specialists (PTS). In the first instance, PTS should familiarise themselves with COBS 19. All guidance below is designed to […]

Newsletter

News and expert analysis straight to your inbox

Sign up