North Yorkshire Credit Union in liquidation

| November 2, 2012
North Yorkshire Credit Union in liquidation

The North Yorkshire Credit Union has informed its 5,000 savers that it is no longer able to meet its expenses and has been placed in liquidation.

It is the sixth credit union to collapse this year, while seven credit unions failed in 2011.

The North Yorkshire credit Union is regulated by the Financial Services Authority and is covered by an official compensation scheme, ensuring that all its customers will receive their money back within one week.

It said in a statement: “Members with less than £1,000 savings will receive cash over the counter payment at your local post office or bank.

“All members with balances over £1,000 will receive a cheque payment.

“The FSCS aims to pay compensation claims within 7 days of declaring a default.”

Janet Looker, chairwoman of the board of directors of the North Yorkshire credit union said that “significant mistakes” had led to its collapse.

Ms Looker, said: “I suspect one of the mistakes was that we expanded too fast.

“We set up very modestly as the York credit union in 2006 and were managing very gently and growing steady but slowly.

“It may well be looking back, although we were keen to expand into North Yorkshire, it was a very, very large undertaking to do.”

An investigation in the failure of the organisation will be held by North Yorkshire County Council, which gave it a start-up loan of £200,000.

Meanwhile a new credit union, M for Money has been launched in Harrow.

It will offer loans at reasonable interest rates, providing an alternative to the soaring number of payday loan companies in London offering loans at prohibitively high interest rates.

Credit Unions are financial co-operatives which are owned by their members and prioritise their interests.

Any profit made by a credit union is handed back to its members.

There are currently around 600 credit unions in the UK.

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