Banking unit of Court Service not ensuring value for money: report
The Courts Service's banking unit is not ensuring value for money for thousands of vulnerable people in Northern Ireland whose £300 million in finances it looks after, auditors have found.
The Court Funds Office (CFO) holds and invests money for minors who have been awarded damages in the civil courts or adults who have become incapable of controlling their affairs due to mental incapacitation.
Although it spends £700,000 a year on stockbroker fees, on top of its annual operating costs of £1m, the Northern Ireland Audit Office found that the CFO was not properly accountable.
Auditor General Kieran Donnelly said: "Current arrangements and existing legislation for managing and protecting funds in court do not ensure value for money or proper accountability for clients' funds.
"The CFO is responsible for the stewardship of funds held under the protection of the courts on behalf of some of the most vulnerable members of our society. The interests of its clients must be at the heart of the service provided." The CFO is a business unit within the Northern Ireland Courts and Tribunals Service that provides judiciary-approved banking and investment services.
It invests clients' money in a number of different ways, ranging from deposit accounts with fixed interest rates to buying shares on the stock market.
The most widely used vehicle is Government stocks (gilts), which although offering a lower return also present a lower risk than equities.
The findings of the Audit Office report included:
- A modernisation programme began in 2004 to ensure that the CFO was providing a modern, flexible, cost-effective service that met the needs of clients and stakeholders. The programme is still not complete and much needed legislative change has been delayed.
- None of the groups overseeing the CFO have the necessary independent financial expertise to challenge investment policies or assess quality of stockbroker advice.
- The CFO appointed the same stockbrokers from the 1930s to 2008, when competitive tendering was introduced for the first time. Two tendering processes have been conducted since then and on each occasion a new stockbroker was appointed.
- The CFO has not sought sufficient information to understand the performance of its funds.
- It does not publish any standards to measure the quality of service it provides.
- Is not bound by any efficiency targets set by the Courts Service.
Auditors made a series of recommendations aimed at improving performance and accountability and ensuring better value for money.
The Court Funds Office is a unit which provides a banking service for 14,000 people awarded money by the civil courts. Its main clients include children and people who are mentally incapacitated. In the case of children, the money will be held in trust until they reach 18.
The fund also looks after money which is held in court pending the settlement of civil court action; monetary bails received by the courts; or where the court acts as a receiver of last resort for assets.
Funds can be held for significant periods of time, and currently accounts worth a total of £290m are being managed.