26th September 2006
The Financial Services Compensation Scheme (FSCS) is stepping in to protect members of St Columba's Credit Union who have lost money after the credit union closed its doors.
FSCS has sent application forms to everyone so far known to be a member of the Bradford credit union, to enable them to claim compensation from the Scheme for lost savings. Around 1,400 people are listed as members according to the credit union's records.
"FSCS performs a vital role in protecting consumers and maintaining confidence in the financial services sector. Where consumers are facing financial hardship we will pull out all the stops to prioritise their claims. As a public body there are things we have to do before we can pay compensation but we are doing everything we can to ensure these consumers get compensation for their lost savings fast," says Loretta Minghella, FSCS Chief Executive.
What to do if you think you have a claim
If you are listed as a member of this credit union, you should have received an application for compensation form from FSCS.
FSCS was set up under the Financial Services and Markets Act 2000. It provides a fund of last resort for consumers who have claims against regulated firms that are unable to pay them (described by FSCS as being "in default").
What can FSCS do to help members of St Columba's Credit Union?
FSCS can pay compensation for financial loss of up to £31,700 for deposit claims (made up of 100% of the first £2,000 and 90% of the next £33,000) if a deposit-taking firm (such as a credit union) is unable to pay back money it owes to its members.
1 Before FSCS can pay claims for compensation it must be satisfied that the firm (in this case St Columba's credit union) is unable to pay back money it owes to its customers (described by us as being "in default"). We have completed our investigations and have now declared St Columbas's credit union "in default". This opens the way for consumers to claim compensation from us.
2 To claim compensation from us members of the credit union will need to complete and return the application form, which has been sent to them.
3 If any members of this credit union are suffering immediate financial hardship we will try to prioritise their claim.
Because of the potential financial hardship being faced by members of this credit union, FSCS is fast-tracking its default investigations and increasing resources so that it can deal with claims for compensation quickly.