The Financial Services Authority (FSA) has censured The Pentecostal Credit Union Limited (TPCU) for issuing loans worth £1.2m under its members' names but channelling the money to a church organisation.
The regulatory authority said this was in direct contravention of credit union rules which stated that only individual members could borrow, not organisations.
The director, Reverend Carmel Jones, has been banned from the industry for overseeing this practice.
TPCU is based in Balham, London, with its 1,600 membership drawn from congregations of Pentecostal Churches.
Before coming under FSA regulation in 2002, TPCU was making regular loans to the church organisation for property purchases and repairs.
After a routine assessment in 2003, the FSA warned them to stop this practice with immediate effect because the loans may not be legally enforceable.
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