Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

FSA censures Union and bans Reverend for £1.2m loan channelling

FSA censures Union and bans Reverend for £1.2m loan channelling

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

The watchdog 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 the 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 watchdog 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’, the TPCU made 20 loans to the Church Organisation between May 2007 and July 2011.

The FSA said the 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.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play French fund CEOs: 'Brexit is a lose-lose situation for all of us'

French fund CEOs: 'Brexit is a lose-lose situation for all of us'

'We'll all lose out - but London is an international city, Paris is not.' Leading French asset management CEOs tell us what they think Brexit will mean for the investment business.

Play Mark Barnett - part 2: why I'm not buying Lloyds

Mark Barnett - part 2: why I'm not buying Lloyds

In the second part of our exclusive video interview, Barnett explains why he has no intention of buying Lloyds, and where he sees the greatest income opportunities.

Play Wealth managers reveal the best investment ideas of the year

Wealth managers reveal the best investment ideas of the year

From robotics to impact investing, wealth managers share the best ideas they have heard this year.

Read More
Wealth Manager on Twitter