Ex-Co-op Bank chief barred from top accountants institute
A former chief executive of the Co-operative Bank has agreed to a six-year ban from membership of a key accountancy body after admitting to misconduct during his tenure at the top of the troubled bank.
Barry Tootell – who has already been banned from holding senior roles in the City– will not be able to describe himself as a chartered accountant after his exclusion from the Institute of Chartered Accountants in England and Wales (ICAEW).
The Financial Reporting Council, which oversees investigations into misconduct and has made the recommendation to the ICAEW, will receive £20,000 from Tootell to help recoup costs. It is not clear how much the investigation cost. Other bans recommended by the FRC, which had considered a seven-year ban for Tootell, have ranged from three to 10 years.
Tootell, who could not immediately be reached for comment, was finance director and then acting chief executive of Co-op Bank for 14 months. He took on the role full-time in September 2012 but was placed on gardening leave in May 2013 after the bank was downgraded to junk status. The bank, then fully owned by the Co-operative Group, later had to be bailed out by hedge funds when a £1.5bn hole appeared in its books in 2013 .
Gareth Rees, FRC executive counsel, said: “The period of exclusion imposed in this case sends 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 [chief financial officer] 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.”
Tootell was banned by the Bank of England – along with Keith Alderson, who ran the Co-op’s corporate and business banking division – in January by its Prudential Regulation Authority. They were not found to have deliberately or recklessly breached the rules and the regulator did not make findings of dishonesty or lack of integrity.
The FRC said the Bank of England’s conclusions were “conclusive evidence of misconduct”. The Bank found Tootell contributed to a culture that focused on the short-term financial position (pdf) and did not adequately oversee the corporate loan book that the Co-op took on when it merged with Britannia in 2009. The period of censure covered January 2009 and May 2013.
At the height of the Co-op bank’s crisis, the then chancellor George Osborne announced an independent investigation into what went wrong. The review has not yet started as the Financial Conduct Authority’s investigation into individuals remains ongoing. The FRC said its investigation into the bank’s auditors, KPMG, was also ongoing.
Co-op bank, which reported a £177m loss for the first six months of the year, said the FRC’s ruling was related to the way it had operated in the past. “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 bank said.
“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.”