The London Community Credit Union (LCCU), serving members across several London boroughs, ceased operations on January 22nd, 2024, impacting approximately 17,000 members. The closure, while disruptive, does not pose a threat to members’ savings, which are fully protected under the Financial Services Compensation Scheme (FSCS). Every member will receive their savings back, up to the limit of £85,000 per individual, within seven working days of the closure date. The FSCS will directly contact most members via email, outlining the process for requesting their funds, which can be received either by cheque or bank transfer. Members without email access will automatically receive a cheque at their registered address.
The administration of LCCU, overseen by James Sleight and Stratford Hamilton of PKF Littlejohn Advisory Limited, marks a significant event for the local community. While the credit union’s closure is undeniably a setback, administrators emphasize the availability of support and guidance for all affected members. Those who relied on LCCU for regular payments, such as salaries, benefits, or rent, will receive advice on setting up alternative arrangements. Borrowers are also being contacted individually to address the next steps regarding their outstanding loans. The administrators have reiterated the safety of members’ funds and the FSCS’s commitment to full reimbursement, urging members not to take any action until contacted by either the FSCS or the administrators.
Credit unions, like LCCU, operate as financial cooperatives, enabling members within a specific community to pool their savings and access affordable loans. These institutions often serve as vital alternatives to traditional banks and high-cost lenders, offering a range of financial products tailored to the needs of their members. The closure of LCCU underscores the importance of the FSCS safety net, which safeguards deposits in the event of a credit union’s failure. While the collapse of financial institutions can be unsettling, the FSCS plays a crucial role in maintaining financial stability and protecting consumers.
While the FSCS and administrators work diligently to ensure a seamless reimbursement process, members are cautioned to remain vigilant against potential scams. Anyone contacted unexpectedly by individuals claiming to represent the credit union or the FSCS should exercise extreme caution. It’s crucial to verify such communications by using official contact information, such as the details provided on the LCCU website or the FSCS portal. Reporting suspicious activity will help protect other members from falling victim to fraud.
Members without existing bank accounts are advised to open one immediately with a bank, building society, or another credit union to facilitate the receipt of their compensated funds. Resources for finding alternative credit unions are available through the Association of British Credit Unions Limited (ABCUL) website and the Scottish League of Credit Unions website for those residing in Scotland. The Joint Administrators will provide regular updates on the LCCU website, offering guidance on opening new accounts and other important information. Local Citizens Advice Bureaux can also assist with opening bank accounts, as can high street banks and building societies. Specific assistance for residents in Hackney, Newham, or Tower Hamlets can be found through Citizens Advice East End.
In summary, the closure of the London Community Credit Union (LCCU) while impacting thousands of members, is not a financial crisis for individuals due to the protection afforded by the FSCS. All members will receive their savings back. The administrators and the FSCS are working to ensure a smooth and efficient reimbursement process. Members are encouraged to be cautious of potential scams and utilize official channels for information and support. Those without alternative bank accounts should take immediate steps to open one to facilitate the receipt of their funds. Resources and support are readily available through various organizations, including Citizens Advice and the administrators themselves.
