Central Bank fines Credit Union €210k for failing "to protect its members"

[Brendan Burgess]

St Canice's Kilkenny Credit Union fined by Central Bank

St Canice's Kilkenny Credit Union has been fined €210,000 and reprimanded by the Central Bank for eight breaches of the Credit Union Act after an investigation.

The Central Bank said the credit union, which has over 57,000 members, failed to properly manage the integration of a new IT system which resulted in it being unable to reconcile its main bank account correctly.

As a result, the Central Bank said that St Canice's was unable to ensure the protection of members' savings, but it stressed that no losses were actually sustained.


The Central Bank said the level of the fine reflects the potential serious impact on members, the failure to ensure effective oversight and governance; and the lack of engagement with the Central Bank.

 

[Brendan Burgess]

it stressed that no losses were actually sustained.

Eh, no Mr Central Bank. The members have now lost €210,000 and the costs of the investigation.

The sanction should have been on the responsible directors and employees and not on the members.

Brendan

 

[Bronte]

What costs of investigation would there be?

 

[24601]

This absolutely boggles the mind. Rather than using their enforcement powers to reprimand whoever was responsible for fiddling the prudential returns, the Central Bank has decided to create a real loss to members of €210,000 under the guise of penalising the credit union for not protecting member savings. You couldn't make it up.

There would have been enough of a financial hit to members to cover the (presumably) huge costs involved in additional audit and consulting fees to correct the underlying IT/Accounting issue.

 

[Elnino]

What costs of investigation would there be?

This article re a different credit union might give you some idea of that

Missing €218,000 costs CU €1.2m in losses

The mind boggles as to how the Central Bank can say that there is no loss to members.

 

[Bronte]

Wow, that's mad stuff. Grant Thornton did well.

 

[Elnino]

There is something wrong somewhere where the people investigating the fraud end up costing the credit union three time the losses. Unfortunately I wouldn't think this is exceptional by any means.

 

[MrEarl]

Wow, that's mad stuff. Grant Thornton did well.

Plus new offices on the quays don't come cheap you know !

 

[MrEarl]

...The sanction should have been on the responsible directors and employees and not on the members.

Brendan

Agree 100%

The Central Bank has added to the problem, rather than help to fix it....

 

[WizardDr]

Having worked on reconciliations on some of the biggest banks - this is a total farce.

 

[RichInSpirit]

The sanction should have been on the responsible directors and employees and not on the members.

Brendan

Not wishing to minimize the mistake, etc. But the responsible directors are working voluntarily to the best of my knowledge and even though they are legally responsible for mistakes, you can't really penalize them financially.

 

[Brendan Burgess]

Not wishing to minimize the mistake, etc. But the responsible directors are working voluntarily to the best of my knowledge and even though they are legally responsible for mistakes, you can't really penalize them financially.

That raises a few issues.

First of all, I would agree that it probably should not be a financial penalty. But if the breach was worthy of a fine , they should have been deemed unfit to act as executives or directors.

However, I suspect that the breach was not that serious. That the Central Bank would simply not have the ability to distinguish between a serious offence and a breach of good practice.

Brendan

 

[WizardDr]

This was a nonsense fine.