Payouts from the Financial Services Compensation Scheme for failed credit unions in 2013 have surpassed £3m after the collapse of a fifth lender.
South Warwickshire Credit Union was declared insolvent yesterday, prompting the FSCS to begin the process of paying compensation due to the union’s 1,200 members who hold a combined £214,000 in deposits.
This is the fifth credit union to collapse in as many months. Earlier this week (29 April) Portadown Diamond Credit Union became the first Northern Irish credit union to fail since the region came under the FSCS remit. Portadown was the biggest failure so far with 1,600 members with a combined £1.8m in deposits.
Marches Credit Union collapsed on 24 April, with 350 members and £160,000 worth of deposits. Severn Four Credit Union became insolvent in March, with 1,500 members and £460,000 in deposits. Cornwall and Isles of Scilly Credit Union was the first to fail this year, with 2,100 members and £569,000 in deposits.
Altogether the FSCS will be paying out up to £3.2m for these five failures.
The failures continue in spite of government plans to inject £38m into the credit union industry to help it “modernise and grow”.
