A Pentecostal reverend has been banned from working in financial services after using the credit union he founded to issue fraudulent loans worth £1.2 million.
Reverend Carmel Jones MBE, director of the 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.
The Reverend's actions were in direct contravention of credit union rules which state that 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 FSA will not tolerate this conduct in the industry."
A credit union is a member-owned financial co-operative, controlled by its members and operated for the purpose of providing credit at competitive rates and providing other financial services.
TPCU is based in Balham, London, with its 1,600 membership drawn from congregations of Pentecostal Churches. The credit union declined to comment but 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 the credit union to stop the practice with immediate effect because 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 that both of these suggestions were unlawful but between May 2007 and July 2011, TPCU made 20 loans to the unnamed church organisation.
None of the loan applications had the members' income verified, none of the members were issued with the full terms and conditions of the loans, and TPCU has been unable to prove that any of the loans were approved by its credit committee.
Rev Jones signed and approved 14 of the 20 loans in question, 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.