It has now ceased trading and James Sleight and Peter Hart of PKF Littlejohn Advisory have been appointed as joint administrators.

The FSCS said it expects the total compensation for members of the credit union to be around £2.6m. 

The body said it will compensate most of the 7,173 members within seven days.

The majority of customers will receive a cheque, while a small portion of members will receive a letter to allow them to get cash at any Post Office branch. Where contact details are missing for members who still have money in their Castle & Crystal Credit Union Limited account the FSCS said it will not be able to issue cheques to these members immediately.

Established in September 1993, Castle & Crystal was originally an employee-based credit union known as Dudley MBC Employees Credit Union Limited, operating for the benefit of Dudley MBC employees. It changed its name when its services later became widely available to everyone living or working within the Dudley borough, the county of Worcestershire and to partner organisations.

It had been authorised since 2002, according to the FCA Register.

A number of credit unions have failed in recent years.

Matthew Phillips, head of readiness at FSCS said: “We want to reassure customers of Castle & Crystal Credit Union Limited that their money is safe. FSCS will help customers get back on track as quickly as possible by protecting each member’s savings up to £85,000.

“FSCS’s website has further details and customers can contact us or the joint administrators with any questions.”

Interested parties should contact the joint administrators James Sleight & Peter Hart, PKF Littlejohn Advisory Limited, Third Floor, One Park Row, Leeds, LS1 5HN.

James Sleight of PKF Littlejohn Advisory, said: “All of CCCU’s savers will have their balance returned by the FSCS. They don’t need to do anything to get their money back; savers should look out for a letter in the post from the FSCS in the next few days.” 

The FCA warned former members to be wary of potential scams relation to the credit union.

The last credit union to enter default was Hastings & Rother Credit Union Ltd trading as 1066 Community Bank (FRN 213644). The credit union was founded in 1999 and went into default in August when the FSCS said it expected the total compensation for members of the credit union to be more than £387,000.

6 Towns Credit Union Ltd (FRN 419396) also failed last August and the FSCS said it expected to pay around £1.04m in compensation to 7,416 members of the credit union.

Last year the Financial Conduct Authority cancelled the registration of more than 440 mutual societies, most of which had already been wound up. Registered societies include co-operative societies, community benefit societies, credit unions, building societies and friendly societies.