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.
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 lack of integrity and reputation. Although we have heard dissenting voices on this topic, the FCA obviously felt on fairly steady ground on this. The Final Notice explains that the nature of Flowers' personal failures against the backdrop of his enhanced responsibilities (as a Chair, an approved person and a Methodist minister), means that he cannot be considered ready and willing to comply with the requirements of the regulatory system in the future by virtue of his lack of integrity and reputation. Whilst few may argue with that decision, it is worth recalling that there is FCA guidance in relation to drug-related dismissals and convictions (although in the context of competence and capability) to the effect that they should only be taken into account in relation to a person's continuing ability to perform the regulated activities in question (FIT 2.2.2A).
Finally of interest is the FCA's reference to lack of "fitness and propriety" on the basis of reputation. Although part of the "honesty, integrity and reputation" criterion, reputation is a very unlikely basis for a prohibition. The FCA notes that the public attention garnered after his departure from the Co-op means that Flowers does not have an adequate reputation to perform regulated activities. No doubt, reputational issues would only exceptionally (if ever) alone justify a prohibition, but it would be surprising indeed to see the man dubbed by the media as the 'Crystal Methodist' performing an approved role in the future.