The failure of a Welsh credit union is expected to cost the Financial Services Compensation Scheme – the UK’s version of the National Credit Union Share Insurance Fund – as much as £498,000, or nearly $647,000.
According to reports in the British media, My Community Bank Wales, also known as Loans and Savings Abertawe Credit Union Limited, permanently closed its doors this week and is unable to repay the deposits of 3,128 members. The FSCS is stepping in, promising to compensate the “vast majority” of the CU’s membership within a week.
Alex Kuczynski, FSCS chief corporate affairs officer,
Kuczynski also reassured that the process is "automatic too, so you won't have to apply for compensation."
But the FSCS only protects up to £85,000 of savings, or double that for joint accounts. The expected total payout is slated at £498,000, or $646,959 under current Forex conversion rates.
"Very sadly, from time to time individual credit unions get into financial difficulty and fail," the Association for British Credit Unions Ltd.
The association emphasized that this incident was an “isolated case” and is “no reflection on the performance of the credit union sector overall.”
ABCUL representatives did not respond to Credit Union Journal's request for comment in time for publication.
Members of the credit union holding up to £1,000 in their accounts will reportedly receive a letter instructing them to get cash from their local post office. Others holding more in their accounts will automatically receive a check.
My Community Bank Wales was stationed in Swansea, Wales, off of Walter Road and offered services to those residing in Wales, with the exception of those in Cardiff and the Vale of Glamorgan.
