Croydon LBC has announced ‘unprecedented action' to hold ex-senior leadership to account for ‘misconduct, wrongdoing and failures in governance' that contributed to its financial collapse.

The council's appointments and disciplinary committee today unanimously agreed that a file will be sent to the Metropolitan Police and any relevant professional bodies and institutes ‘for their consideration'.

It comes after independent investigator Richard Penn – a senior associate with the Local Government Association - asked members to consider referring his report into the reasons for the financial collapse of Croydon to the police for ‘assessment of any further action being warranted in regard to the handling of public money and conduct in public office'.

Misconduct in public office carries a maximum sentence of life imprisonment.

In what is thought to be a first for local government, the committee also unanimously agreed to take legal action to ‘recover as much as legally possible' of the £437,000 financial settlement paid to former chief executive Jo Negrini, who has not responded to requests for comment.

A council spokesperson said they were unable to comment on how much of the settlement the council would be seeking or able to recover.

Executive Mayor Jason Perry, who chaired the committee, said the move would help ‘restore public trust and confidence' after the council became the first London borough in more than 20 years to issue a section 114 notice, which turned out to be the first of three.

Council chief executive Katherine Kerswell, who took over from Ms Negrini, told councillors: ‘This situation didn't just happen.'

Mayor Perry said those responsible ‘ought to be held to account for their part in Croydon's downfall'.

He continued: ‘The scale and severity of Croydon's financial collapse is unprecedented and that is why we are recommending unprecedented steps.

‘It is completely unacceptable that individuals who held positions of trust should escape the consequences of their misconduct.

'Nor should they be rewarded for their failures while our residents, businesses and partners continue to pay the price.

‘They must be held to account – that is why I have consistently pushed for the council to take the strongest possible action against those responsible.'

Ex-council leader Tony Newman and ex-cabinet member for finance and resources, Simon Hall, said in a statement that none of the three independent reports that had been commissioned had ‘found any evidence at all of bad faith, dishonesty or malice'.

The statement read: ‘The people of Croydon deserve better than today's announcement.

'Instead of doing their jobs, getting a grip and serving the people of Croydon, the council is wasting yet more time and resources trying to scapegoat people who have not been in office for several years.'