A business unit within the Court Service, which invests money belonging to children and mentally incapacitated people from Londonderry, is not transparent in its dealings with its clients and can’t demonstrate it is operating under the highest levels of accountability.
That’s according to the Auditor General Kieran Donnelly, whose team has just examined the management and protection of funds held in court by the Court Funds Office (CFO).
The CFO manages around £290m on behalf of 14,000 clients and uses a stockbroker to advise on what investments should be made to meet each client’s needs.
In 2012/13 £700,000 was paid out in stockbroker’s fees on top of the CFO’s running costs of around £1m.
Mr Donnelly stated: “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.
“However, few people outside the CFO are aware of how it is performing: the CFO is not transparent in its dealings with clients and cannot demonstrate that it is operating under the highest levels of accountability.
“Court Service needs to ensure that an appropriate level of resources is provided to the CFO and there is an efficient and effective IT system in place to support its business.
“The CFO needs to do much more to provide information to its clients, particularly in respect of fees and charges.”
A report by the NIAO says the Court Service needs to strengthen the independent scrutiny of investment policies on behalf of clients as a matter of urgency.
The Department of Justice (DoJ) and the Court Service should also bring forward legislation to allow the CFO operate efficiently and effectively in a ‘21st century financial marketplace.’
The CFO should also seek independent advice to determine its information needs.
It should establish precise, measurable and challenging service standards, monitor performance and publish the results.
And it should establish robust mechanisms to ensure that all clients receive regular information on their investments, including the income accruing and all charges made.