The Co-op has launched a "root and branch" investigation into how the embattled lender is run after a video emerged of its former chairman Paul Flowers handing over money to buy hard drugs.
The group pledged to review its "democratic structure" and stressed the need to "modernise" itself following a £1.5bn (€1.8bn, $2.5bn) black hole in its balance sheet and the fact its former chairman, who is also a methodist minister, was embroiled in a crack cocaine, crystal meth and ketamine-fuelled sex orgies.
"We need to modernise to ensure that the interests of all our 7 million members are properly and directly represented in the oversight of our business activities," said the Co-op in a statement.
"Given the serious and wide-ranging nature of recent allegation, the new executive management team has started a fact-finding process to look into any inappropriate behaviour at The Co-operative Group or The Co-operative Bank and to take action as necessary."
The 63-year-old ex-bank chief, who was in charge at the time of the Co-op's near collapse, was filmed counting out £300 in cash. The Mail on Sunday said a friend of Flowers, Stuart Davies, handed over the footage and a series of text messages.
One text said: "Have 2 bags of Charlie here and have ordered another 5... enough? Px".
Flowers was paid £132,000 a year as chairman of the Co-op Bank from 2010 until May 2013, when he stepped down.
He faced embarrassment in front of the Treasury Select Committee earlier this month after telling MPs that Co-op's assets stood at £3bn when, in fact, they were around £47bn.
The Co-op Bank is one of UK's smallest lenders with 6.5 million customers and a 1.5% share of the current account market.
Suspension and Further Investigations
While Flowers said he is seeking help for his drug abuse, the Financial Conduct Authority (FCA) revealed that he was not eveen interviewed for his appointment as chairman as he was already a member of the board.
"There was no legal requirement for a secondary interview, however, given the significance of the Co-op to the UK's financial services industry, officials did meet with Mr Flowers to discuss his plans for the Board and his banking experience," said the FCA.
The TSC's chairman Andrew Tyrie MP has since said that the current approved persons regime had "degenerated into little more than a bureaucratic box-ticking exercise".
"This latest episode over the chairmanship of the Co-op illustrates how much there is to do to reform the regulatory approval process for bankers, especially those at the top of our banks, and how important it is that fundamental reform take place."
The Labour Party has also suspended Flowers.