An FSA supervisory notice said it was not satisfied that management of the credit union was “fit and proper”, and had failed to provide audited financial information and regulatory returns.
According to the FSCS, 530 people have approximately £235,000 deposited with the credit union. People with less than £1000 will receive a letter to enable them to get cash over the counter at a post office. Anyone with more than this figure will receive a cheque.
Earlier this month, trade body the Association of British Credit Unions launched an expansion project designed to offer a wider range of products for members, including current accounts, budgeting accounts and Cash Isas.
18 credit unions have been declared in default by the FSCS since May 2011, with many citing difficult lending conditions. These include:
May 2013 – Millom & District Credit Union
April 2013 – South Warwickshire Credit Union, Portadown Credit Union and Marches Credit Union
March 2013 – Severn Four Credit Union
February 2013 – Cornwall and Isles of Scilly Credit Union
Dean Smith, director of Bristol-based advisory firm My IFA Friend, said: “Credit unions provide a valuable service for the less well-off and their use should be encouraged over alternatives such as payday lenders. But they must be run like proper businesses with stringent measures in place to protect savers and creditors.”