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You can find the current article at its original source at http://www.guardian.co.uk/money/2012/nov/12/pentecostal-credit-union-shamed-fsa-disgraceful-loans
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| Pentecostal Credit Union shamed by FSA over 'disgraceful' loans | Pentecostal Credit Union shamed by FSA over 'disgraceful' loans |
| (5 months later) | |
| A credit union that put its members' money at risk by secretly channelling funds to a church organisation has been named and shamed by the Financial Services Authority. | A credit union that put its members' money at risk by secretly channelling funds to a church organisation has been named and shamed by the Financial Services Authority. |
| Pentecostal Credit Union, based in Balham, south-west London, was slammed by the FSA for its "disgraceful" behaviour after it issued loans worth £1.2m in the names of its members when in actual fact it was lending the money to a Pentecostal church organisation. | Pentecostal Credit Union, based in Balham, south-west London, was slammed by the FSA for its "disgraceful" behaviour after it issued loans worth £1.2m in the names of its members when in actual fact it was lending the money to a Pentecostal church organisation. |
| It is the latest blow for the credit union movement, coming days after one of the sector's biggest players, the North Yorkshire Credit Union, went bust – the sixth union to collapse so far in 2012. | It is the latest blow for the credit union movement, coming days after one of the sector's biggest players, the North Yorkshire Credit Union, went bust – the sixth union to collapse so far in 2012. |
| Set up in 1980, Pentecostal Credit Union has about 1,600 members drawn from congregations of Pentecostal churches. The FSA said the seriousness of its failings warranted a financial penalty, but as this would impact on all the members the regulator had decided to "publicly censure" the union. The union's director, Reverend Carmel Jones, escaped a fine but has been banned from the industry for overseeing this practice. | Set up in 1980, Pentecostal Credit Union has about 1,600 members drawn from congregations of Pentecostal churches. The FSA said the seriousness of its failings warranted a financial penalty, but as this would impact on all the members the regulator had decided to "publicly censure" the union. The union's director, Reverend Carmel Jones, escaped a fine but has been banned from the industry for overseeing this practice. |
| The FSA said that before coming under regulation in 2002 the credit union was making regular loans to the church organisation, but was later warned it must stop doing so. Nevertheless, between May 2007 and July 2011 it made at least 20 loans to the church organisation in the names of 15 individual members. These loans totalled £1.2m and ranged in size from £7,500 to £87,500. | The FSA said that before coming under regulation in 2002 the credit union was making regular loans to the church organisation, but was later warned it must stop doing so. Nevertheless, between May 2007 and July 2011 it made at least 20 loans to the church organisation in the names of 15 individual members. These loans totalled £1.2m and ranged in size from £7,500 to £87,500. |
| None of the loan applications had the members' income verified, and none of the members were issued with the full terms and conditions of the loans, the FSA said. Pentecostal Credit Union's failings "exposed its members to an excessive risk of financial loss", it added. | None of the loan applications had the members' income verified, and none of the members were issued with the full terms and conditions of the loans, the FSA said. Pentecostal Credit Union's failings "exposed its members to an excessive risk of financial loss", it added. |
| Jones signed and approved 14 of the 20 loans, and in 12 cases signed the cheques for the loan money, none of which were made out to the individuals purportedly taking out the loans. | Jones signed and approved 14 of the 20 loans, and in 12 cases signed the cheques for the loan money, none of which were made out to the individuals purportedly taking out the loans. |
| The church organisation initially made repayments on the loans, but the relationship between the two broke down at the end of 2009 and the repayments stopped. The estimated amount outstanding is at least £670,000. | The church organisation initially made repayments on the loans, but the relationship between the two broke down at the end of 2009 and the repayments stopped. The estimated amount outstanding is at least £670,000. |
| Tracey McDermott, the FSA's 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. Credit unions are vital institutions for the communities they serve, and the members of the Pentecostal Credit Union deserved better." | Tracey McDermott, the FSA's 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. Credit unions are vital institutions for the communities they serve, and the members of the Pentecostal Credit Union deserved better." |
| The FSA would normally have imposed a fine for these serious breaches, but took into account "the important role of credit unions and the fact that any fine would impact … members". The watchdog added that Jones would have been fined £60,000 "but for his financial circumstances". | The FSA would normally have imposed a fine for these serious breaches, but took into account "the important role of credit unions and the fact that any fine would impact … members". The watchdog added that Jones would have been fined £60,000 "but for his financial circumstances". |
| The credit union co-operated fully and has replaced its entire management at the request of the FSA. | The credit union co-operated fully and has replaced its entire management at the request of the FSA. |
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