Credit Unions Censured for Breaching Due Diligence and Disregarding Members’ Interests
05 April 2012
The UK Financial Services Authority (FSA) has announced that it has publicly censured Pollok Credit Union (PCU) and Shettleston and Tollcross Credit Union (STCU). According to the FSA, PCU issued a large loan, equivalent to 88% of its capital, to a trust, which was a non-member of the credit union, and in doing so threatened its own solvency. STCU made out loans to seven of its directors on terms more favourable than those available to its other members. It removed the preferential rate upon knowing that it was not allowed, but failed to recover lost earnings and, therefore, paid a reduced dividend to its members as a result. The credit unions were found to have “breached the requirement to conduct business with due skill care and diligence, while [STCU] was found to have breached the requirement for a firm to pay due regard to the interests of its members”.
FSA’s media release (26 March 2012)