Central Bank finds major issues with car prize draws in credit unions
The Central Bank has determined that there are major issues with the way many credit unions and many questions to be asked about how they conduct car draws.
The regulator found during a probe that there was a lack of documentation with regard to the car draw procedures at the credit unions.
It was also discovered that the credit unions are making big profits from the competitions but failing to distribute this money to members and unethically most staff members in credit unions allowed to enter the draws.
Bazarly, the Central Bank found that credit union staff and directors have won the car in 30pc of the prize draws operated.
It comes after 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.
The Central Bank is now probing the operation of car draws by looking at a sample of 34 credit unions.
In its survey of 276 credit unions 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. A spokesperson for the probe said:
“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.