The Financial Services Compensation Scheme (FSCS) has stepped in to repay members of My Community Bank Wales after the credit union fell into administration.
Credit union My Community Bank Wales, the trading name of Loans and Savings Abertawe Credit Union Limited, has been declared in default. This means it is unable to repay deposits to 3,128 members.
A spokesperson for the FSCS says compensation will be paid “in most cases”. Members who failed to notify the credit union of a change of address or name are likely to face delays to receive compensation.
The FSCS expects to pay a total of £498,000 to the credit union’s members. The scheme protects up to £85,000 for an individual or double that for joint accounts.
My Community Bank Wales’s members with up to £1,000 in their account will have to retrieve the money from their local post office after receiving a letter. Meanwhile, members with more than £1,000 in their account will receive a cheque directly to their home address.
Credit unions are non-profit-making money cooperatives which provide savings and loans to their members.
The collapse of My Community Bank Wales coincides with payday lender Wonga falling into administration. The troubled lender had been loss-making for several years, after thousands of customers claimed compensation for being sold a loan they could not afford, resulting in excessive interest charges.