FSCS to pay out £100,000 as another credit union collapses
The Financial Services Compensation Scheme is set to pay out £100,000 in compensation to members of Liverpool-based credit union Waltonian after the lender was declared in default yesterday (9 August).
This is the fourth credit union to have fallen so far in 2012 and follows the most recent £98,000 pay out in May for members of Middlesborough-based Pallister, which had been previously hit with a supervisory notice by the Financial Services Authority.
The regulator stripped permissions from Pallister for having inaccurate capital reserve figures and for reporting negative capital for the quarter ending December 2011.
In January two further credit unions collapsed prompting FSCS action, which paid around £94,000 to bail out members of the Hull East of the River union after earlier providing redress of approximately £206,000 to compensate members of the Handsworth Breakthrough union.
The latest failure affects around 703 members of the Waltonian credit union, who have deposits totalling around £100,000. FSCS said members should get their money back within seven days.
In November 2011 of new rules designed to boost credit unions by opening up their membership, which came into force earlier this year.
The move to boost credit unions comes following six insolvencies in the sector in 2011. According to the Financial Services Authority, which announced that it would be looking into the sector in July 2011, approximately six credit unions are declared in default each year.