More than 2,100 members of the failed Cornwall and Isles of Scilly Credit Union will get their combined £569,000 back within seven days, following the Financial Services Compensation Scheme declaring it in default.
On Friday (15 February), five branches in Cornwall were closed for business and the FSCS is acting to protect those members who have invested £569,000.
The scheme said in a statement that the process is automatic it aims to start sending payments to people in the next few days.
People with less than a thousand pounds will receive a letter to get cash over the counter at the Post Office. Anyone with more than this will receive a cheque.
The credit union, which is also known as Cornish Community Banking, provided loans, savings accounts and current accounts. Its collapse means that members with current accounts will lose access to them and any payments coming out of the accounts will not be made.
About 309 people are affected and will need to make other arrangements, according to FSCS.
FSCS said it has paid out around £26bn in compensation to more than £4.5m as a result of UK regulated banks, building societies or credit unions going bust since 2001.
The insolvency practitioner handling the winding up of the credit union is Chantrey Vellacott DFK.
