The Financial Services Regulatory Authority of Ontario (FSRA) has resumed oversight of the day-to-day operations of PACE Credit Union following the resignation of several directors and the credit union’s CEO and chief risk officer.
PACE was placed into administration by FSRA's predecessor in September 2018 due to mismanagement and misconduct by members of senior management and a lack of effective governance by the PCU board. PACE members elected new directors at the beginning of this year as the first step toward returning to member-controlled governance – and the new board hired new senior management in April – at which time FSRA gave oversight of PCU's day-to-day operations to the new PACE leadership team.
"The board of PACE inherited problems created by the former PACE leaders and worked hard to identify and resolve them – and I would like to thank the board members for their leadership during this difficult time," said Mark White, FSRA's CEO.
Misconduct investigation completed
White said FSRA recently completed an investigation into misconduct related to the sale of preferred shares to PACE board members from July 2017 to June 2019, a sale that breached the CUCPA, the legislation governing PACE.
“While it is with regret that I accept their resignations, as we all wanted the best for PACE's members and depositors, there was no consensus on how to best address those breaches."
But White said PACE continues to have ample liquidity and capital above requirements, making it financially viable. "I want to reassure members of PACE that their deposits are protected through the deposit insurance reserve fund administered by FSRA.” He said PACE is open for business.
FSRA will be working with stakeholders to plan a return to member-controlled governance and to address the misconduct and harm caused by the pre-2020 officers and directors of PACE. The PACE CEO and CRO have offered to work on an orderly transition.
