FSCS in fresh £94k credit union bail-out
The Financial Services Compensation Scheme has announced that it is to bail-out members of the Hull East of the River Credit Union after it was declared in default today (16 January).
According to the FSCS, the credit union has around 560 members with accounts totalling around £94,170. By declaring it in default, the Scheme said that it believes the company is “unable or likely to be unable to repay its members’ deposits”.
The default is the second so far in 2012, following the failure of the Handsworth Breakthrough Credit Union earlier this month, which the FSCS bailed out to the tune of £206,000.
Last year, a total of six credit unions were bailed out by the Compensation Scheme after being declared in default.
Members will be entitled to compensation of up to £85,000 each and will not need an application form to make a claim, the FSCS said.
For cases under £1,000, which make up the bulk of accounts, compensation will be delivered in cash over the counter by Post Offices and by cheque for anything above that.
More complex claims that cannot be paid within seven days will be paid by the Scheme within 20 working days.
This month marked the introduction of new Treasury rules that have relaxed membership requirements of credit unions in a bid to boost the sector.
Changes to the Credit Unions Act mean these institutions are now free to provide services to new groups of customers and offer different types of products and partnerships.
Previous restrictions meant those eligible to join a credit union had to be individuals with something in common have been removed. Now, so credit unions can extend their reach to organisations such as housing providers, community groups, businesses, partnerships and charities.