A credit association that put its members' allowance at danger by discreetly channelling supports to a chapel organization has been declared and abashed by the Financial Services Authority .
Pentecostal Credit Union , formed in Balham, south-west London, was slammed by the FSA for its "disgraceful" poise after it released loans value 1.2m in the names of its members when in real fact it was lending the allowance to a Pentecostal chapel organisation.
It is the ultimate blow is to credit association movement, forthcoming days after a of the sector's greatest players, the North Yorkshire Credit Union, went bust " the sixth association to fall so far in 2012.
Set up in 1980, Pentecostal Credit Union has about 1,600 members drawn from congregations of Pentecostal churches. The FSA mentioned the gravity of its failings fitting a financial penalty, but as this would effect on all the members the regulator had motionless to "publicly censure" the union. The union's director, Reverend Carmel Jones, transient a excellent but has been criminialized from the attention for overseeing this practice.
The FSA mentioned that before forthcoming beneath law in 2002 the credit association was creation periodic loans to the chapel organisation, but was after that warned it contingency end carrying out so. Nevertheless, between May 2007 and July 2011 it done at least 20 loans to the chapel organization in the names of 15 particular 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 nothing of the members were released with the full conditions and conditions of the loans, the FSA said. Pentecostal Credit Union's failings "exposed its members to an extreme danger of financial loss", it added.
Jones sealed and granted 14 of the 20 loans, and in 12 cases sealed the cheques is to loan money, nothing of which were done out to the people purportedly receiving out the loans.
The chapel organization primarily done repayments on the loans, but the attribute between the two pennyless down at the end of 2009 and the repayments stopped. The estimated amount outstanding is at least 670,000.
Tracey McDermott, the FSA's executive of coercion and financial crime, said: "This is a infamous box of a credit association putting the interests of other organization before those of its members. Credit unions are key institutions is to communities they serve, and the members of the Pentecostal Credit Union deserved better."
The FSA would routinely have imposed a excellent for these major breaches, but took in to account "the critical purpose of credit unions and the fact that any excellent would effect ... members". The watchdog updated that Jones would have been fined 60,000 "but for his financial circumstances".
The credit association co-operated entirely and has transposed its whole administration at the solicit of the FSA.