A credit union serving 17,000 members across several London boroughs has collapsed, prompting administrators to reassure savers their deposits are safe.
London Community Credit Union (LCCU) went bust on January 22, calling in joint administrators James Sleight and Stratford Hamilton of PKF Littlejohn Advisory, who confirmed it has ceased trading.
Regulators have also declared the credit union in default, which means savers are entitled to receive their deposits back, as all savers’ monies are protected (up to the limit of £85,000 per individual). The refund of deposits will be conducted and issued by the Financial Services Compensation Scheme (FSCS).
Members have also been warned to beware of scams, with the Financial Conduct Authority telling them: “If you are cold called by someone claiming to be from the credit union, PKF or the FCA, please end the call”, and providing a link to its advice page on financial scams.
James Sleight, of PKF Littlejohn Advisory, said: “We want to reassure all of LCCU’s members that their money is safe and they do not need to worry. All of their savings deposits will be returned to them by the FSCS.
“Members do not need to take any action to receive their savings balance and will receive information from the FSCS either by email or by post. We will also be writing to all members shortly with further information”.
In a statement on its website, the credit union gives advice to members on what to do next, telling them to wait until the FSCS contacts them by email or, if it does not have an email address for them, by post.
“If you had an up to date email registered with LCCU, you may receive an email from the FSCS inviting you to access the FSCS Payments Portal,“ it says. “The email will be from no-reply@payments.fscs.org.uk. Please disregard any emails about the FSCS Payments Portal sent from any other email address as they may be fraudulent.”
Related: Credit unions on the financial frontline
The credit union operated in Hackney, Haringey, Islington, Newham, Tower Hamlets, Waltham Forest and the City of London, with branch offices in Bethnal Green, Poplar, Hackney and Stratford.
With local credit unions playing an important role in building financial resilience and empowerment among often low-income members, and offering an ethical, affordable alternative to high-interest payday lenders, the news comes as a blow to the communities served by LCCU. It was launched in 2000 as Tower Hamlets Community Credit Union as part of an anti-poverty initiative by the local authority, and became a key partner in the Department for Work and Pensions Growth Fund which promoted improved and affordable access to credit for financially marginalised groups.
After a period of rapid growth saw it expand into surrounding boroughs, it renamed itself London Community Credit Union in 2010. Four years later, it took a transfer of engagement from Forest Gate-based NewCred Community Credit Union, which has fallen below minimum reserves requirement.
Products included LCCU’s own range of current accounts, a contactless Mastercard debit card, JamJar accounts for those needing help with budgeting, and a payroll deduction savings and loans scheme in conjunction with the London boroughs of Tower Hamlets, Newham, Hackney, a number of housing associations and community organisations.
Neighbouring London Capital Credit Union has made a bid to attract members from LCCU, posting on X: “We’re stepping in to support people in #EastLondon following the closure of a smaller local credit union. We’re here to provide secure savings & low-cost loans ensuring that those in our communities have access to ethical, affordable & reliable finances when they need them most.“
LCCU’s collapse comes after the cost of living crisis has put several years of pressure on the credit union sector. More than 70 credit unions have gone to the wall in the past ten years, and issues around mergers and resilience have been a regular fixture on the agenda at the annual conferences of the Association of British Credit Unions (Abcul).
Related: Renfrewshire credit unions merge as sector’s consolidation trend continues
Responding to the news, Abcul CEO Robert Kelly said: “Credit unions are a vital and valued part of the financial ecosystem, serving as a cornerstone for financial inclusion, community strength, and shared prosperity. Their importance to society cannot be overstated, as they empower individuals and families to build financial resilience and achieve their goals.
“Despite the unfortunate closure of London Community Credit Union, it’s essential to highlight the remarkable contributions of credit unions across Great Britain. In 2024, total credit union savings reached an all-time high of £2.34bn, reflecting an impressive 19% growth over the past year. This milestone underscores the growing trust in and impact of credit unions in improving lives and fostering economic stability.”
He added: “While it is true that some credit unions, often smaller ones with limited resources, face challenges and may cease operations, the broader movement demonstrates resilience and adaptability. Across communities, credit unions are stepping up to support affected members, partnering with local authorities to ensure continuity of service and assistance. This response exemplifies the heart of the credit union ethos: ‘people helping people’.
“In the strongest-performing credit unions, we see a sector embracing digitalisation and professionalisation, ensuring they remain fit for purpose in a rapidly changing financial landscape. This adaptability and community-focused mission will continue to position credit unions as an indispensable asset to society, even in challenging times.”
