ATHLONE, Republic of Ireland–Two credit unions here have been forced to suspend a practice unique to CUs in this country—member prize draws.
The prize draws have a long, and sometimes controversial history, but have proven to be popular with members, with the regulator describing them as a “significant financial activity across the credit union sector.”
In the draws members pay into the fund, usually through automatic deductions, and names are chosen for the winners of the prizes, which often include automobiles. Now, two CUs have suspended their draws over compliance-related matters; there has been no suggestion of illegality, according to The Independent.
RTE Credit Union and Athlone Credit Union are putting their draws on hold and even refunding some members who have paid into the prize draws after it was discovered there was no written consent from members who were involved in the drawings.
Involved for 30 Years, But…
“In some cases members only gave verbal consent to enter the draws, despite regulators insisting there should be written consent given,” the Independent reported. “Some members have been in the draws for up to 30 years but there is no written record of them signing up for the draws.”
“RTE Credit Union is currently engaged in a process of reviewing its policies and procedures, including those relating to its members’ prize draw,” it said in a message to members, the Independent reported.
It added its board had decided to suspend its draw with immediate effect, pending the outcome of the review.
Contributions from share accounts to the members’ draw will not be processed until the draw resumes, the notice said.
Both the RTE staff credit union and Athlone had offered cash prizes in monthly draws, the report said.
‘Significant Issues’
The scrutiny comes three years after Ireland’s credit union regulator, the Central Bank, found what it said were significant issues with how many credit unions operate prize draws.
As CUToday.info reported earlier, the Central Bank conducted a review and found that staff and directors won prizes in 30% of the credit unions that ran the competitions.
“Credit unions took issue with this finding, arguing that staff and directors make up a large proportion of those who enter the draws,” the Independent reported.
In its 2018 review the Central Bank recommended that all staff and volunteers involved in the draw should be excluded from participation to avoid “reputational risk, and ensure independence and impartiality.”
The Independent further noted that a 2016 forensic review of the now defunct Rush Credit Union could not identify the winners of 15 car draws, even though over €220,000 was spent on the vehicles.