Credit union enters administration – find out what it could mean for you

The credit union in New Street – a not-for-profit financial co-operative offering an ethical alternative to banks, payday or doorstep lenders – went into administration today.

Regulatory bodies have also declared the credit union in default, which means that savers are entitled to receive their deposits back.

James Sleight and Peter Hart, of PKF Littlejohn Advisory in Leeds, have been appointed as joint administrators of CCCU and the 7,173 members across the West Midlands have been assured their money is safe.

The Financial Services Compensation Scheme has stepped in and will automatically pay back money, according to the account details it receives from the credit union and based on account balances at May 20.

The FSCS will be contacting them by post.

It expects the total compensation for Castle & Crystal Credit Union, which was supported by Dudley Council, to be around £2.6 million.

The scheme will compensate most of the members within seven days with the majority of customers receiving a cheque, while a small number of members will receive a letter to allow them to get cash at any Post Office branch.

Anyone who believes they still have money in an account with the Credit Union but has not received a compensation cheque from FSCS within seven days should contact the joint administrators.

Matthew Phillips, head of readiness at FSCS said: “We want to reassure customers of Castle & Crystal Credit Union that their money is safe.

“FSCS will help customers get back on track as quickly as possible by protecting each member’s savings up to £85,000.

“FSCS’s website has further details and customers can contact us or the joint administrators with any questions.”

A dedicated page on the FSCS website includes questions and answers, which may be useful for members.

Mr Sleight said: “All of CCCU’s savers will have their balance returned by the FSCS. They don’t need to do anything to get their money back; savers should look out for a letter in the post from the FSCS in the next few days.”

Where contact details are missing for members who still have money in their CCCU accounts the FSCS will not be able to issue cheques to these members immediately. If members have not updated any recent change of address with CCCU they are advised to make contact as soon as possible.

All of CCCU’s bank accounts will be closed by the banks around four weeks from the date of the joint administrators’ appointment.

It is important that people contact, as soon as possible, the Department for Work and Pensions or any other Government offices that handle benefits and any other party who regularly pays money into their account, such as their employer, and provide them with new account details for another bank account in their name.

Members who do not have an account with any other bank, building society or credit union will need to set one up as a matter of urgency.

They will also need to cancel any standing orders depositing monies into their CCCU savings account as soon as possible.

Those with loans with CCCU need to continue to make contractual repayments on it until fully paid off.

Castle & Crystal was founded in 1993 for Dudley Council employees and was extended to the wider community in 2002.