Central Bank finds major issues with car prize draws at many credit unions
THE Central Bank has found major issues with the way many credit unions conduct car draws.
A probe by the regulator found a lack of documentation, credit unions generating large revenues from the competitions but failing to distribute this money to members, with most staff members in credit unions allowed to enter the draws.
It also found staff and directors have won a prize in 30pc of the credit unions that operated a draw.
It comes after the controversy at now defunct Rush Credit Union when investigators were unable to find the winners of 15 car draws, even though more than €220,000 was spent on the vehicles.
There were claims that a staff member, who has since left, may have “won” a car in one of the draws run by the north County Dublin lender.
Allegations were also made that some members of Rush Credit Union were entered into car draws without their permission or their knowledge.
Now the Central Bank has probed the operation of car draws by inspecting the books of a sample of 34 credit unions.
It also surveyed 276 credit unions and it found major issues around the governance of car draws.
The Central Bank found that in approximately 30pc of credit unions who operate prize draws, staff and directors have won prizes over the period October 2014 to March 2017.
The probe found: “Draws were conducted by staff, who were eligible to enter the draw, with no independent oversight present.
“In some credit unions there was poor record keeping on the disbursement of prizes to winners, and copies of correspondence to members were not retained on file,” the Central Bank report found.
Large numbers of credit unions never get the operation of the draw reviewed by auditors.
Almost half of credit unions operate a prize draw.
Around 446,000 members participate in them, an increase of circa 46,000 from 2015 to 2017.
Some €40m in prizes was disbursed between October 2014 and March last year, with two credit unions distributing over €1m per year in prizes.
The Central Bank report sets out recommendations which credit unions should put in place when conducting car draws.