The Financial Services Authority have publicly censured two credit unions, based in Glasgow after they were found to have broken lending rules. Shettleston and Tollcross Credit Union was reported to have loaned money to Directors at preferential rates and Pollock Credit Union made a number of big loans to a client not holding a membership.
.In the ten months leading up to April 2007, the Shettleston and Tollcross Credit union gave preferential rates on loans given to seven directors. Directors have agreed to repay the money after the Credit Union realised its mistake and withdrew the rates.
A number of loans were made to a new trust managing a day-care centre and a post office, by Pollock Credit Union from April ’08 to August ’11. The FSA’s head of retail enforcement, Tom Spender, is reported to have said that in these cases it was better to impose a public censure, however in more serious events a fine may have been imposed as the Credit Unions are not immune to the rules.
He went on to say that Credit Unions were supposed to protect their members and if they were to put their interests at risk, further action would be taken. It is usual for Credit Unions to charge a small fee to join, and then before any loan can be taken the member is expected to save for at least 3 months. Any loan given will then be savings related.