Compensation for Members of Credit Unions

The FSCS warns that compensation may be required after the liquidation of another credit union, Birmingham-based Lee Bank & Highgate Credit Union.

Following the liquidation of another credit union, the FSCS warns that compensation may be necessary: they have guaranteed savings up to £85,000 for members of a credit union that is declared in default.

After being notified by the FSA that the Birmingham based Lee Bank & Highgate Credit Union faced closure, the FSCS released a statement commenting that they are to work alongside the FSA to determine whether the credit union is able to return members’ savings. Lee Bank & Highgate are the latest in a succession of credit unions to enter insolvency. This follows the closure of the Southend Credit Union, the Worcestershire Credit Union, the Havant Area Savers Credit Union and the Caribbean Parents Group Credit Union.

The FSCS comments “If the credit union can’t pay back the money it owes its members, we will declare it ‘in default’ and will aim to pay compensation to eligible members in the majority of cases within seven days.”

“We will aim to pay any remaining compensation claims (i.e. those that are likely to be more complex) within twenty working days. Members of the credit union will not need to apply for compensation – we expect to send their compensation to them automatically.”

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