Reverend Carmel Jones MBE, director of the London-based Pentecostal Credit Union (TPCU), issued loans under its members’ names – in one case without their knowledge – and channelled the funds to an unnamed church organisation, the City regulator said.
His actions were in direct contravention of credit union rules which state only individual members can borrow, not organisations, and exposed members to an excessive risk of financial loss, the Financial Services Authority (FSA) said.
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 TPCU is based in Balham, with its 1,600 membership drawn from Pentecostal congregations. The credit union confirmed Rev Jones was no longer with the organisation.
Before coming under FSA regulation in 2002, TPCU was making regular loans to the church organisation at the centre of the investigation for property purchases and repairs. After a routine assessment in 2003, the FSA warned it to stop immediately as the loans may not be legally enforceable.
In 2006, Rev Jones wrote to the FSA proposing to reinstate the loan system with either insurance indemnity for its members or the establishment of a corporate entity of which they would be shareholders. The FSA warned the Reverend both suggestions were unlawful but between May 2007 and July 2011, TPCU made 20 loans to the unnamed church organisation.
No loan application had the member’s income verified, no members were issued with the full terms and conditions, and TPCU cannot prove that any loans were approved by its credit committee.