04 Feb Are Your Club Committee Members Signing Blank Cheques?
It’s a common scenario – a committee member doesn’t know how much something is going to cost and asks fellow signatories on the club’s bank account to sign a blank cheque, and the committee member will fill the amount and payee in at a later date. It seems harmless enough but we advise all club committee members to refuse such requests to ensure they are not held to be negligible if a fraud subsequently takes place.
The practice was highlighted recently when the former treasurer of a rugby club in Cornwall was jailed for 21 months for defrauding the club of more than £76,000. The court heard that the treasurer’s fellow committee members wrote blank cheques for him to use and gave him full and sole control over the bank’s internet banking account. The club was almost forced to close and is now actively fundraising to replace the stolen money.
So what is best practice for a sports club in this situation? No blank cheques should be issued and all payments over a nominal amount, e.g. £50, should require at least two signatories, or two authorisations if an online payment.
It is important for committee members to note that they could be held to be personally liable if any such fraud results in the club being unable to pay its debtors, even if the club is a limited company, so ensure all committee members are aware of the risks and establish best practice in your club.