The Co-op Group chairman has resigned, saying "serious questions" have been raised by the scandal over its former banking chairman, Paul Flowers.
Mr Flowers apologised after he was filmed allegedly buying drugs, while the Co-op has said it is investigating.
Questions have also been raised about Mr Flowers's competence in the role, to which he was appointed in 2010.
Len Wardle, who led the board that appointed Mr Flowers, said he felt it was "right" that he stepped down now.
Meanwhile David Anderson, former chief executive of the Co-op Bank, is appearing before MPs on the Treasury Select Committee, where he is giving evidence about the troubled bank and its takeover of the Britannia Building Society.
'Real change'The company said Mr Wardle had resigned as chairman of the group and from the board "with immediate effect". He had held the position since 2007 but announced last month that he would retire in May 2014.
"The recent revelations about the behaviour of Paul Flowers, the former chair of the Co-operative Bank, have raised a number of serious questions for both the bank and the group," Mr Wardle said in a statement.
"I led the board that appointed Paul Flowers to lead the bank board and under those circumstances I feel that it is right that I step down now."
Mr Wardle said the "time is right for real change" in the company's operations and governance.
He will be replaced by Ursula Lidbetter, who is the Co-op Group's deputy chairwoman and chief executive of the Lincolnshire Co-operative Society.
Mr Flowers, who was chairman of the bank from April 2010 until June this year, was filmed allegedly ordering cocaine and boasting about his use of other banned substances in a video published by the Mail on Sunday.
The Methodist minister and former Bradford City councillor said his actions were "stupid" and "wrong". He has been suspended from both the Labour Party and his church.
Following the revelations, the Co-op Group said it would launch a "fact-finding process to look into any inappropriate behaviour" and a review of its "democratic structure", which will look at how the board is constituted and chaired.
'Fit and proper'The scandal has also prompted pressure on City regulators to introduce tougher checks on candidates for senior banking roles.
End Quote Reverend Geoff ReidI don't think the Co-operative Bank got the political nous they thought they were paying for"
Conservative MP Brooks Newmark questioned how Mr Flowers could have been appointed.
"Clearly he was not fit to be in that position and while obviously his performance was lamentable, I also think unfortunately that the regulators should be held to account on this. They should have done their due diligence to see whether Mr Flowers was fit and proper to run a major financial institution," he told BBC Radio 4's Today programme.
Former CBI director general, Lord Digby Jones, told Today there should be "more rigorous implementation" of the regulations surrounding appointments.
But he added it was unlikely Mr Flowers would be appointed to the same role now.
Geoff Reid, a Lib Dem councillor in Bradford and retired Methodist minister who has known Mr Flowers for 30 years, told BBC Radio 5 live: "He [Mr Flowers] can be very generous, very gifted as a speaker either in the pulpit or the council chamber, and at the same time he can be subject to incredible lack of judgement.
"I don't think the Co-operative Bank got the political nous they thought they were paying for."
'No grasp'Mr Flowers appeared before a committee of MPs earlier this month, during which he appeared to have "no grasp" of "basic" facts about the bank, according to BBC business editor Robert Peston.
He said Mr Flowers had never worked in the banking sector in "any senior capacity", but had been appointed chairman of the Co-op Bank as a result of a "power struggle within the co-operative movement".
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Paul Flowers struggles with figures at Treasury Select Committee
Our correspondent said Mr Flowers' rivals in the movement had been "surprised and disappointed" when his appointment was approved.
David Jackman, head of ethics at the Financial Services Authority until 2003, said it was "disturbing" Mr Flowers had made it through the vetting procedure.
Andrew Tyrie, chairman of the Treasury Select Committee, who headed up the recent banking standards commission, said MPs saw that Mr Flowers was "manifestly unsuitable" for the job when he appeared before MPs on 6 November.
The Mail on Sunday said he was filmed buying the drugs days after being grilled by the MPs.
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