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News October 2016 Former CEO of Co-operative Bank plc admits Misconduct in settlement agreement

Former CEO of Co-operative Bank plc admits Misconduct in settlement agreement

28 October 2016
PN 62/16

Former Chief Financial Officer and Chief Executive of the Co-operative Bank plc (Co-op Bank), and Institute of Chartered Accountants in England and Wales (ICAEW) Member, Barry Tootell, has admitted Misconduct and agreed to exclusion from membership of the accountancy body for six years and a £20,000 payment towards the Financial Reporting Council’s (FRC) Executive Counsel’s costs.
 
The Misconduct admitted arises out of Adverse Findings made by the Prudential Regulation Authority (PRA) in respect of Mr Tootell’s responsibilities as an approved person, the details of which are set out in the PRA’s Final Notice of 14 January 2016. These findings are conclusive evidence of Misconduct under the FRC’s independent Accountancy Scheme.
 
During the period between 1 January 2009 and 10 May 2013, Mr Tootell breached Statement of Principle 6 of the Statements of Principle and Code of Practice for Approved Persons, which provides that an approved person performing an accountable function must exercise due skill, care and diligence in managing the firm for which he is responsible in his accountable function. Also between 22 July 2009 and 10 May 2013, Mr Tootell was knowingly concerned in the contravention by Co-op Bank of Principle 3 of the Principles of Business, in that it failed to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.

The parties have agreed the following terms of settlement, which has been approved by a legal member of the independent Tribunal Panel:
  • Exclusion as a member of the ICAEW for a recommended period of six years.
  • A sum of £20,000 to be paid by Mr Tootell as a contribution to the Executive Counsel’s costs.
Gareth Rees QC, Executive Counsel to the FRC, 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 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.”
 
The investigation in relation to KPMG Audit Plc and the audit of the financial statements of Co-op Bank is ongoing.

Mr Barry Tootell Settlement Agreement (PDF)

Notes to editors:
  1. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We are the UK competent authority for audit and set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.  We represent UK interests in international standard-setting.  We also monitor and take action to promote the quality of corporate reporting and auditing.  We operate independent enforcement arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
  2. In relation to disciplinary matters, the FRC is the independent, investigative and disciplinary body for accountants and actuaries in the UK dealing with cases which raise important issues affecting the public interest. In brief, the stages of the disciplinary process are:
    • Decision to investigate
    • Investigation
    • Decision whether to bring disciplinary proceedings against a member firm or     member and, if so decided, referral to Disciplinary Tribunal
    • Tribunal hearing
    • Determination and imposition of sanction and/or costs orders.

The FRC can start a disciplinary investigation in one of two ways: (i) the professional bodies can refer cases to the FRC; and (ii) the FRC may decide of its own accord to investigate a matter. The Conduct Committee will consider each case identified or referred to it and decide whether or not the criteria for an investigation are met.

Investigations are conducted by Executive Counsel and the Enforcement Division. If disciplinary proceedings are commenced, Executive Counsel delivers a Formal Complaint to the Conduct Committee. The Conduct Committee then instructs the Convener to appoint a Disciplinary Tribunal.

3.  The Prudential Regulation Authority’s (PRA) final notice from January 2016 can be found at: http://www.bankofengland.co.uk/pra/Documents/supervision/enforcementnotices/en150116a.pdf

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