The Deposit Insurance Corporation of Ontario (DICO) has taken control of PACE Savings & Credit Union Ltd. while it investigates concerns related to governance.
A rare occurrence, DICO typically puts firms “under administration” when they’re under serious financial or operation distress. With DICO taking control of PACE, depositors are protected.
PACE’s CEO Phillip Smith and his father Larry Smith, the former CEO and current president, have been put on administrative leave.
The investigation into PACE is the result of both DICO’s regular duties overseeing the credit union and issues raised by a third-party. However, while the investigation progresses, the credit union will operate as usual and its members, numbering more than 37,000, will still have access to their funds and can make transactions as they usually would.
DICO’s CEO Guy Hubert says the regulator “fully anticipates that the governance issues will be resolved,” reported the Globe and Mail.
While PACE was initially formed to serve Peel Region, it amalgamated with smaller credit unions to grow to $1.1 billion in assets. Larry Smith was the PACE’s CEO for nearly 30 years, but in March 2015 took on the role of president while his son assumed his erstwhile role. However, the Globe reports that their futures with PACE are up in the air.
“What role they might play at the Credit Union in the future will be determined in due course during the Administration proceedings,” said DICO in a statement.
According to an email sent out by Central 1 Credit Union, which services credit unions in Ontario and British Columbia, PACE is “currently solvent and operating profitably.” Last year, the PACE reported $5.3 million in profit.
Executives at other credit unions raised concerns with DICO last year about an investment product conceived by PACE Securities, reports the Globe. However, Hubert denied the investigation involves PACE Securities.