FSCS steps in as fifth credit union fails 

It is the fifth credit union this year to go bust and the second this month.

The credit union has stopped trading and is now in default.

According to the Association of British Credit Unions at the end of September 2020 there were about 240 credit unions across England, Scotland and Wales serving about 1.3m customers and looking after nearly £1.7bn in deposits.

As part of a controlled closure, Rainbow Saver has contacted most members who have withdrawn their remaining balances. 

The FSCS will protect the remaining 463 members who have not arranged withdrawal of their money by today (18 May).  

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The FSCS says it expects the total compensation for Rainbow Saver Anglia Credit Union to be around £179,000.

Using the credit union’s records FSCS will send as many remaining members as possible a cheque for their balance automatically. Where members can be contacted directly, FSCS expects to return their balances within a week. 

The FSCS says that contact details are missing for some of the members who still have money in their Rainbow Saver account, which means the FSCS will not be able to issue cheques to these members immediately. Anyone who believes they still had money in an account with the credit union but has not received a compensation cheque from the FSCS within seven days should contact the joint administrators, James Sleight and Peter Hart of PKF Geoffrey Martin & Co Limited. 

Sarah Marin, chief customer officer at FSCS, said: “We want to reassure any remaining members of Rainbow Saver Anglia Credit Union Limited that their money is safe. Most members who have not already closed their accounts will receive their money by cheque directly from us within a few days.”

The North East Warrington Credit Union (NEWCU) Limited was declared in default earlier this month by the FSCS to protect its 1,182 members. The credit union ceased trading recently with the compensation bill expected to be around £1.3m.

The City of Plymouth Credit Union Limited in Devon, which had 2,348 members, was declared in default by the FSCS in April owing £1.2m in total. Strathkelvin Credit Union Limited in Glasgow and north-east Wales’ All Flintshire Credit Union were declared in default by the FSCS in the first quarter of this year.

Cumulative losses so far at failed credit unions this year have topped several millions.

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