Collapse of a credit union : Credit Card Guide

Collapse of a credit union

Over recent years credit unions have become increasingly popular, enabling consumers to enjoy the benefits and personal attention of a community run financial institution that offers both saving and borrowing facilities.

However, some consumers have been shocked this week to discover that their local credit union has collapsed, which means that they have no access to their savings, benefits, and in some cases even their wages. Many households have been left without access to their money according to reports.

Street Cred, a credit Union based in Rochdale, closed down earlier this week. Members have been left without access to savings, benefits, and wages, but the Financial Services Compensation Scheme has reassured them that their money is safe and protected. The agency plans to work with officials from the credit union to sort out payouts for members of the union.

In the meantime members are being asked to contact the Department of Work and Pensions if they have benefits paid into their accounts. The non for profit credit union had around three thousand members in all, from around the Greater Manchester, Rochdale, and Middleton areas. Debts for the union are thought to have mounted to close to half a million pounds according to reports.

An official from the council, which has set up a help line in relation to the issue, stated: "Savings with Streetcred are secure, but we want to ensure that account holders' questions and concerns are dealt with quickly and effectively."

A spokesman from the Financial Services Compensation Scheme added: "We are aiming to get things done by Christmas. We are fairly confident we will be able to get this done."

Tom Smith
29th October 2007

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