Challenger Bank Names Tory Peer As Chairman

A former leader of the House of Lords during David Cameron's tenure as prime minister has become the latest peer to enter Britain's financial sector by taking on the chairmanship of a little-known challenger bank.

Sky News can reveal that Lord Strathclyde recently joined Bank and Clients (B and C), a business set up by investment firm Ocean Capital offering products including savings accounts and specialist mortgage loans.

His appointment as B and C's chairman was approved by the Prudential Regulation Authority last month but has not been publicly announced.

Lord Strathclyde, who led a review last year aimed at asserting the primacy of the House of Commons, has replaced Sandy Flockhart, a former HSBC executive.

Mr Flockhart, who was appointed as B and C's chairman in 2014, is understood to have stepped down owing to ill health.

The new chairman is one of a number of peers who have turned up in senior roles in banking.

Lord Flight is a board member of Metro Bank (Other OTC: MBNKF - news) , which listed on the London Stock Exchange (Other OTC: LDNXF - news) this year, while Lord Turner, the former chairman of the City watchdog, is a director of OakNorth, another new bank.

Lord McFall, a former chairman of the Treasury Select Committee, briefly joined Atom Bank, another start-up, as a non-executive director, but stepped down to join the Banking Standards Board (BSB), a new body designed to promote better industry ethics.

That role also proved short-lived when he quit after a bust-up with the BSB's chairman.

B and C, one of a breed of lenders established in the aftermath of the financial crisis to challenge the dominance of Britain's five biggest high street banks, also offers loans to large and medium-sized companies.

Lord Strathclyde held a number of ministerial roles, including at the Scottish Office, Department of the Environment and the Department of Trade and Industry where he was Minister for Small Firms.

A source said his political background had helped to identify him as a suitable chairman for a fast-growing bank.

The lender entered the UK banking market after paying £13m to Virgin Money to buy a licence held by the Somerset-based Church House Trust.

The challenger banking sector has been hard-hit by the financial turbulence emerging after the UK's vote to leave the European Union.

Shares (Berlin: DI6.BE - news) in companies including Aldermore, Shawbrook and Secure Trust Bank have all fallen sharply, while Virgin Money said on Tuesday that it was deferring a move into lending to small and medium-sized businesses.

B and C declined to comment beyond confirming Lord Strathclyde's appointment.