The Financial Services Compensation Scheme is stepping in to protect nearly 400 members of Thanet-based Wantsum Savers: The Isle of Thanet Credit Union Limited, after it was decalred in default earlier this month.
The compensation scheme has pledged that the “overwhelming majority of savers” will get their money back within seven days. Using credit union records, the FSCS said it will automatically send payments to members.
Some 400 savers have just over £100,000 with Wantsum Credit Union. People with up to a £1,000 will receive a letter to get cash over the counter at their post office and anyone with more than this will receive a cheque.
Last year, HM Treasury proposed in a new consultation paper to apply bank insolvency rules to credit unions, warning a lack of formal legislation for winding up credit unions poses significant risks as currently “considerable intervention” is needed from the regulators.
The government said while credit union default has so far been “adequately managed” under normal liquidation procedure and FSCS payments have been made quickly, these businesses have required considerable intervention by regulators.