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Unholy union: FSA bans reverend and censures credit union

The FSA has censured The Pentecostal Credit Union for channelling £1.2 million of its members' loans into a church organisation.

 
Unholy union: FSA bans reverend and censures credit union

The (FSA) has publicly censured The Pentecostal Credit Union (TPCU) and banned a reverend for issuing £1.2 million of loans under its members’ names but channelling the money to a church organisation.

The regulator said this channelling was in ‘direct contravention’ of credit union rules, which state only individual members could borrow and not organisations.

As a result, the director Reverend Carmel Jones has been banned from the industry.

Balham-based TPCU has 1,600 members and previously made regular loans to the Church Organisation for property purchases and repairs, prior to coming under FSA regulation in 2002.

However, the FSA warned TPCU to stop this practice with immediate effect after an assessment in 2003, because the loans may not have been legally enforceable.

In 2006, Jones wrote to the FSA and proposed to reinstate the loan system, but with either insurance indemnity for its members, or the creation of a corporate entity, of which members would be shareholders.

Despite the FSA warning Jones that both of these ideas were ‘unlawful’, TPCU made 20 loans to the Church Organisation between May 2007 and July 2011.

The FSA said TPCU’s failings ‘exposed its members to an excessive risk of financial loss,’ and that Jones approved 14 of the loans in question, and signed the cheques for the loan money in 12 of these cases.

The relationship between TPCU and the Church Organisation then broke down at the end of 2009 and the loan repayments stopped, leaving an estimated £670,000 outstanding.

Tracey McDermott, FSA director of enforcement and financial crime, said: ‘This is a disgraceful case of a credit union putting the interests of another organisation before those of its members. The FSA will not tolerate this conduct in the industry.

‘Credit unions are vital institutions for the communities they serve, and the members of The Pentecostal Credit Union deserved better.’

5 comments so far. Why not have your say?

AndyAndy

Nov 12, 2012 at 13:03

But why were they not under closer supervision given previous form.....

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Alan, Bristol

Nov 12, 2012 at 14:26

Oh, what a sorry state of affairs!

The FSA advised the TPCU in 2003 that its loans may not be legally enforceable and again in 2006 that the TPCU’s ideas were unlawful. So, the TPCU ploughed on regardless!

What are the ethics of the FSA that they allowed these unlawful practices to continue, unchecked?

Just because the TPCU hid behind some religious air of respectability does not grant the TPCU the right to conduct itself in some fraudulent manner.

The FSA should revoke the TPCU’s current licence and get them to re-apply. The Church Organisation should be vigorously pursued through the Courts for repayment of their loan. As for the Rev Camel Jones, he should be de-frocked.

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William Phillips

Nov 12, 2012 at 15:34

You'd never know from this report that 'Carmel Jones' is a black man who ran the biggest credit union in the country and got the MBE in 1990 for his work with it. Or that black churches are believed by the police to be riddled with financial frauds and linked exorcism rackets conducted by their pastors against gullible congregants.

Full marks for PC reporting, CityWire. And well done the FSA for proceeding so gingerly so as not to hurt 'community sensitivities' or 'cultural differences'-- like the lamestream mediia 'investigating' (not) the trafficking of young white girls by Muslim immigrants.

Which country generates the bulk of email financial scams, btw?

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Clive B

Nov 12, 2012 at 18:35

@ William Phillips

I imagine the reason Citywire didn't mention the guy's colour was because they're not racist and they know that one black person (if that's what he is) committing a crime tells us no more about the general tendency of blacks to commit crimes than one white person committing a crime tells us.

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grayson reynolds

Nov 15, 2012 at 10:29

@William Phillip

What the hell does the man's ethnicity have to do with it? or which country perpetuates the most email fraud? Your hidden agenda is clear for all to see. Disgraceful!

Ive been on the FSA website to read the report in full. The loans were not fraudulent or illegal, and the report makes this abundantly clear as a mitigating factor as to why no financial penalty was imposed on either the Credit Union or Rev. Jones. It was the FSAs opinion that the loans may not be legally enforceable, something the credit union is testing in court now. The credit unions due dilligence is what got it into trouble (eg not getting forms signed, not giving applicants the terms and conditions of their loans etc etc).

That was poor, but no reason for Rev. Jones to be "Defrocked"

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