The debacle over the allegedly drug-taking Co-op Bank chairman underlines the need for closer scrutiny

In particular, the details of how Rev Flowers became the chairman of a bank with assets of £47bn should be the subject of urgent review

There is a familiar ring to the tale of the Reverend Paul Flowers, the Methodist minister and chairman – until very recently – of Co-op Bank, was has been exposed allegedly buying hard drugs. The story has many echoes elsewhere. So much so, indeed, that a banker up to his neck in scandal hardly seems shocking. The institution itself has run into difficulties? Nothing new there either.

But what sets the Flowers affair apart is that this is the Co-operative. The historic, traditional, one for all and all for one, Co-op. It is not some capitalist, global investment banking machine but a mutual – the financial equivalent of John Lewis, that other businesses held so dear. And we have grown used to politicians holding up the member-owned business as the model to follow, a panacea to the hard-edged, red-toothed, profit-making behemoths.

The big banks have been dismissed as little better than casinos, playing with other people’s money, acting fast and loose with their shareholders, taking risks they would never take if it was their own cash at stake. Now, the Co-op, with a drug-taking ex-boss who became chairman despite – unbelievably – having virtually no top-level experience, has been shown to be no better than any of them.

Arguably, the level of irresponsibility involved is even worse. Mutuals cannot behave as other companies: the degree of trust that they rely upon is greater. But there is also another reason why they should be more cautious and conservative. Unlike their publicly-quoted counterparts, they are not subject to the same scrutiny from financially sophisticated, institutional and individual shareholders. While the companies themselves may regard it as a blessing that they do not need to bare themselves to analysts’ probings, the problems of the Co-op Bank put the risks of that lack of examination in the starkest possible light. Mutuals cannot be a law unto themselves – their ownership structure requires them to aspire to higher standards.

If anything, then, industry watchdogs ought to pay closer heed to the affairs of mutuals than their private-sector equivalents. And in the case of the Co-op, in particular, the details of how Rev Flowers became the chairman of a bank with assets of £47bn should be the subject of urgent review.

The other organisation that needs to take a close look at its embracing of Rev Flowers is the Labour party. Not for the first time, the movement has come over all starry-eyed where a senior business figure is concerned. The lack of judgment displayed in appointing Rev Flowers to its Business and Industry Advisory Group, and granting him private talks in the Commons with the leadership, is woeful.

Labour has a poor record in its dealings with business. Too often, the party hierarchy is prepared to take someone on face value. Rev Flowers has been suspended by Labour for “bringing the party into disrepute”. But this rather has the feeling of a stable door being closed.

It can only be hoped that lessons will finally be learned from this sorry episode. Regulators must be less forgiving, Labour must be more selective. Mutuals must accept that they, above all others, cannot be lackadaisical. Despite the Co-op Bank debacle, they still offer an ideal of sharing and trust that the rest of business does not.