An ordained minister from a Balham-based credit union has been branded a "disgrace" after he issued unlawful loans worth £1.2m to a church.
Reverend Carmel Jones, director of the Pentecostal Credit Union (PCU), sent out loans in the names of some of its 1,600 members when in reality the money was being secretly channelled to an unnamed church.
According to the Financial Services Authority (FSA), this was in direct contravention of credit union rules which stated that only individual members could borrow, not organisations.
Rev Jones, who was awarded an MBE in 1990, was not only named and shamed by the FSA but also banned from the industry for overseeing the practice.
The PCU is based in Oldridge Road, in Balham, and has 1,600 members drawn from congregations of Pentecostal Churches.
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. Credit unions are vital institutions for the communities they serve, and the members of the PCU deserved better."
Between May 2007 and July 2011 the PCU made at least 20 loans, totalling £1.2m and ranging from £7,500 to £87,500, to the church organisation in the names of 15 individual members.
The FSA added: "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 the Pentecostal Credit Union has been unable to prove that any of the loans were approved by its credit committee.
"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.
"In one case, the member had no idea a loan had been made in his name."
The church in question still owes the outstanding money to the credit union, but stopped making repayments in 2009.
Rev Jones left his post as a director of the credit union in March this year and the rest of the old directors were removed in May at the request of the FSA.
Despite the seriousness of the rule breaches, Rev Jones has not been fined the £60,000 penalty the FSA might have imposed because he cannot afford to pay it.
The credit union itself has also not been fined, because this would have meant further losses for its members.
Leslie Laniyan, new chair of the PCU's directors, said: "The previous directors made a number of mistakes in relation to the granting of loans and the credit union has suffered financially as a result.
"We apologise unreservedly to our members for these actions and thank them for exercising goodwill towards the Pentecostal Credit Union."