The FCA Prohibits Paul Flowers

Author:Mishcon De Reya
Profession:Mishcon de Reya
 
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The FCA has issued a prohibition order that prevents Paul John Flowers from performing any function in respect of any UK regulated activity. This prohibition relates to the conduct of Flowers whilst at the Co-operative Bank ("Co-op"). Flowers was both a non-executive director (from May 2009) and then the Chairman between April 2010 and June 2013.

Flowers' shortcomings have already been the subject of considerable media interest and commentary. However, to summarise, amongst the details included in the Final Notice are the use of a work phone to call chat lines, a work email to send and receive explicit messages and messages about illegal drugs, and a conviction post Co-op for the possession of illegal drugs. In the circumstances, the media commentary that has surrounded the Final Notice has focussed more on the length of time it has taken the FCA to issue the prohibition, than the fact of the prohibition itself.

Comment

Despite the idiosyncratic nature of Flowers' personal failures, the Final Notice is nonetheless of wider interest. It is also in many respects, a curiously reasoned determination.

What is strange about the Final Notice is its relationship with competence and capability. A lack of competence and capability can in extreme circumstances constitute a ground for prohibition. The Final Notice sets out carefully and in some specific detail what it says the responsibilities of Chairpersons are (including with reference to contemporaneous soft-law guidance such as the Financial Reporting Council's corporate governance guidance). It does so in a way that suggests it is setting itself up for a discussion about competence failings and whether Flowers should be prohibited for those reasons. Yet, despite this, it does not comment in any respect on his competence, and accordingly does not prohibit Flowers for competence failings.

Instead, the Final Notice determines that Flowers is not a "fit and proper" person by virtue of his...

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