The Co-op bank has asked its former chairman Paul Flowers to hand back £31,000 as political wrangling over his dramatic fall from grace intensifies.
The troubled financial institution said it was seeking to recover contractual payments made to the former Methodist minister since he quit the £132,000-a-year post.
Mr Flowers, 63, who led the Co-op for three years, is being investigated by police for allegedly buying and using illegal drugs including crystal meth, crack cocaine and ketamine.
He has also been accused of incompetence and resigned in June after the bank found a £1.5bn black hole in its finances following the purchase of Britannia Building Society in 2009 and abortive attempts to take on hundreds of Lloyds Bank branches.
The bank now faces a rescue which will see 50 branches close and investors including US hedge funds take control of 70% of the business.
In a statement, the bank said: "When Paul Flowers relinquished his responsibilities in June, it was agreed, as per his contractual obligations, that his fees for the rest of his period of office would be paid.
"Following recent revelations, the board stopped all payments with immediate effect and no further payments will be made."
It comes as senior Tory MP David Davis said George Osborne and the Treasury had "serious questions to answer" about the oversight of the bank.
"There are really serious questions to answer about what they were all doing," David Davis told the Financial Times.
Mr Miliband has fought back against Mr Cameron's 'smears' over the scandal Issues over the bank's operations were raised by a rival at the time of the aborted takeover bid of Lloyds branches.
"These problems were apparent to a rival and would have been - with a bit of work - to anyone else," Mr Davis said.
Labour - which accuses Prime Minister David Cameron of seeking to "smear" the party over its relationship with the Co-op - seized on the comments in a bid to move the spotlight on to the Conservatives.
Leader Ed Miliband insists the party acted with the "utmost integrity" in its dealings with Mr Flowers and suspended him when the allegations about his private life emerged.
Shadow chancellor Ed Balls, who received a £50,000 donation to his office from the Co-operative Group, said he had "nothing to hide".
He told Sky News political editor Adam Boulton that he had never had a phone call or a meeting with Mr Flowers and stressed that the donation came from the Co-op Group and not the Co-op Bank.
Mr Cameron has announced an inquiry into the bank's ailing finances and the decision to appoint Mr Flowers - with details expected to be announced within days.
It emerged on Thursday that Mr Flowers was convicted of drink-driving in 1990 and for gross indecency in a toilet with a man in 1981.
In 2011, he resigned his role on Bradford council after being caught with pornography on his council laptop and it has been alleged he falsely claimed £75,000 from a drugs charity when he was chairman of trustees in 2004.
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