I’m sue he did you know. Indeed, I’m sure he spluttered that it was absolutely appalling that the FSA should try to insist that the board actually knew something about banking. That it was the very fact that they were not bankers which would make them such good people to run the bank.
The Guardian appears to disagree:
As the politicians squabble over who got most cuddly with the Co-op Bank (short answer: all main parties saw advantages at various times), let’s stick to the basics. This scandal is first and foremost about a failure of regulation.
It was absurd that the Financial Services Authority did not insist that the Co-op Bank have a chairman who knew something about banking. And it is astonishing that the regulator thought a badly run, poorly-capitalised bank should be given a year to try to buy 631 branches from Lloyds.
Yes, the Co-op Group itself also looks ridiculous. Its system of promotion by election may have produced a form of democracy where voting power is so diffuse that the culture of the organisation has become inward-looking and self-obsessed.
The main board consists entirely of insiders. It is generally safe to run a golf club that way, but a large commercial enterprise up against competitors with better access to capital is taking a mighty risk.
That is the Co-op’s tragedy and the only silver lining in the saga of the Rev Paul Flowers is that the movement will now have to think honestly about how it is governed.
If it looks at John Lewis, an employee-owned partnership, or Nationwide building society, the Co-op will see that both successful organisations hire independent outside directors to provide sceptical views.
The penny dropped for John Lewis in 2006, when it appointed its first independent non-executives at a time of modernisation.
The Nationwide board has had a majority of independents for decades. Checks and balances in the boardroom matter and the Co-op should acquire some.