James Moore: Will the FCA investigate the Co-op? It must make its position clear

Outlook It is often noted that the Co-op Bank is the first to get into difficulties without having to call on the taxpayer for cash. By contrast to the earlier bailouts of Royal Bank of Scotland, HBOS, Northern Rock, Bradford & Bingley (what a long and sorry testament that list is to the UK banking industry), Co-op Group and the bank's bondholders are footing the bill for the debacle.

Bondholders in those other banks didn't bear any of the consequences of their failure, and that left a nasty taste in the mouth, given how many schools and hospitals went into bailing them out. So, with taxpayers off the hook, Co-op demonstrates that the new, tough regulatory set up works, right?

Up to a point. You see, the other thoroughly unsatisfactory consequence of the way what happened to that long list of failed banks was handled is that no one was held accountable.

Some executives and directors lost their jobs, it's true, but they left with enormous pensions and many subsequently grabbed new roles with indecent haste.

Now, yesterday Jesse Norman, the Conservative MP, read out several very bullish statements made by the Co-op in its annual report, and also highlighted an interview given by group chairman Len Wardle, which suggested that all was rosy in the bank's garden during Co-op Bank's failed attempt to take over Verde (now TSB) from Lloyds.

Was a false market created in the bank's bonds as a result? It's certainly a question people who invested in those bonds have a right to ask.

Neville Richardson, the former chief executive of the bank, has testified that Andrew Bailey, now head of the Prudential Regulation Authority, had twice contacted Co-op to raise concerns about Co-op Bank's capital before Mr Wardle's interview.

Of course, Mr Richardson has his own agenda. He wants us to believe he was on the side of the angels and that there were not problems with the loan book of Britannia Building Society (which he brought to the Co-op when the two merged) while he was in charge. It has been identified as a major contributor to Co-op Bank's woes.

Really, the only thing that is completely clear about this story is that it is getting murkier by the day.

As the bank prepares to list on the London Stock Exchange, some clarity is urgently required.

I spoke to Martin Wheatley just before the launch of the Financial Conduct Authority and was impressed. He said all the right things, and he pointed to some notable incidents yesterday where the FCA has proved willing to intervene and where its predecessor, the Financial Services Authority, might have sat on its hands.

However, while he said the FCA would investigate events at Co-op if there were sufficient grounds to do so, and that he would take seriously points raised by Mr Norman, he really needs to do more than that.

There should be no equivocation. Given the mounting controversy, this is one occasion where the FCA should clarify its position with regard to an investigation. Because the credibility of Britain's regulatory system is again at stake.