*A Central Bank review of credit unions has found that, in roughly 30 per cent of those that operated prize draws, staff and directors were winners of prizes.
The review, which looked at credit unions between October 2014 and March 2017, found poor practices relating to prize draws across a number of credit unions.
“Prize draws are a significant financial activity across the credit union sector. As such there is an onus on credit unions operating such draws to ensure that the governance, operation and recording of financial transactions are in line with legislation, regulations and guidance, and are fully transparent to members,” the Central Bank review said.
It noted that a number of credit unions were failing to apply guidance issued on prize draws and found many instances of poor oversight by boards, a lack of documented policies and procedures and poor record keeping.
Some 46 per cent of credit unions operated prize draws in the 2½-year period, with 446,220 members participating in those draws.
The vast majority of draws, or 95 per cent, had cash prizes available while 55 per cent of draws had a car as the main prize. Overall, about €40 million was distributed between October 2014 and March 2017.
Poor record keeping
The Central Bank found poor record keeping specifically relating to members’ authorisation and withdrawal forms. It also noted that in 85 per cent of credit unions, staff could partake in prize draws.
The review into prize draws came after the failure of Rush Credit Union in Co Dublin. After the appointment of accountancy firm Grant Thornton as an independent third party to carry out a forensic review of the institution, a number of members disputed deductions from their accounts relating to car draws. Grant Thornton was unable to locate details of winners of previous draws, as no information was recorded.
The Rush Credit Union board made the decision to refund all members with the amounts deducted from their accounts in relation to the car draw for the period between 2009 and 2016 at a cost of €450,000.
“While all of the issues outlined above did not arise in each credit union inspected, they are representative of the range of findings across the sample of credit unions,” the Central Bank said.
* This article was edited on March 12th, 2018
