Wolverhampton City Credit Union steps in to help savers after collapse

And bosses say their first task is to protect members of the former Whitmore Reans Credit Union from unscrupulous loan sharks and money lenders.

Wolverhampton City Credit Union is now running the old credit union's offices and is already talking to scores of former Whitmore Reans members.

Matt Goulding, manager of the Wolverhampton City Credit Union, which has more than 7,000 members, said: "We have to see that people don't resort to less ethical lenders, who can get people into an even worse debt problems."

Non-profit community banks, owned and organised by their members, credit unions are run to provide a safe source of saving and borrowing for local people.

Although the Whitmore Reans union collapsed last week, dragged down by bad debts, the banking sector's 'lifeboat', the Financial Services Compensation Scheme, is ensuring all 981 members of the credit union get their savings deposits back.

The Whitmore Reans union held around £1m in savings.

Borrowers will be able to continue repaying their debts with the credit union's administrators, Cork Gully, at their previously agreed rate.

Mr Goulding added: "Payments and letters to members of the Whitmore Reans Credit Union only went out just before Easter, so we are expecting a lot more people to get in touch over the coming weeks.

"Our staff are currently running the old Whitmore Reans offices and we are negotiating with the landlords to make that permanent. We are also hope to take over the credit union's links with local schools, such as West Park and St Andrew's.

"Whitmore Reans is an area with high levels of deprivation and issues with literacy – and financial literacy. It is important we make sure these people still have access to the services of a credit union."

The Wolverhampton City Credit Union is in robust health, with £2.2 million savings and £1.2m in loans last year.

It generated £318,500 in income in 2015, while the cost of bad debts was cut to £27,0000. As a result, members are being paid a dividend of two per cent on their savings for last year.