Thursday, 14 Nov 2019

Savvi Credit Union fined by Central Bank for having too many long-term loans on its books

ONE of the largest credit unions in the State has been fined for having too many long-term loans on its books.

Savvi Credit Union was also fined by the Central Bank for failing to have systems and controls in place to manage its long-term lending.

And it breached rules by paying a director, which is prohibited under credit union legislation.

The total fine was €185,500. This had been reduced from €265,000 after it agreed to a settlement with the Central Bank.

The lender rebranded as Savvi in 2017 after the merger of St Patrick’s ESB, Independent News & Media and the Irish Times and other credit unions. The mergers took place over a number of years.

It breached Central Bank rules by having more than 15pc of its book lent out for more than 10 years.

In a statement, the Central Bank said the breaches had occurred between 2013 and 2017.

Savvi notified the regulator in the summer of 2017 that it had breached the long-term lending limits by having more loans exceeding 10 years than are permitted by the regulations.

Despite this, the lender issued another nine long-term loans later in 2017.

“Each of these nine loans represented a breach of the relevant long-term lending limit set by the Central Bank.”

The Central Bank added that a probe of Savvi’s systems found its controls and governance arrangements were deficient in a number of respects.

Savvi also fell foul of the regulators in the Central Bank by paying a director €28,341 in travel expenses over a four-year period.

Payments of remuneration to a director is expressly prohibited under credit union legislation.

Central Bank director of enforcement and anti-money laundering Seána Cunningham said regulators welcome that credit unions seek to grow and develop their businesses.

However regulations and safeguards still apply and, must be adhered to at all times.

“Lending limits act as a safeguard to mitigate the specific risks associated with different types of lending. As such, Savvi’s breach of the long-term lending limit is a serious matter for the Central Bank.”

She said there should be no conflict between business activity such as providing loans and compliant behaviour and actions.

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