East London Credit Union, trading as Waltham Forest Community Credit Union, has gone into administration.

Customers of the credit union are assured that their money is safe with the Financial Services Compensation Scheme (FSCS) despite the credit union branch stopping trade on September 11 and being currently in default.

The closure happens after a previous proposed merger with East London Credit Union and London Community Credit Union failed to proceed.

FSCS promises to compensate the majority of the union’s 5,500 members within seven days from September 11.

Balances below £1,000 will receive a letter to collect cash over the counter at a post office, while balances over £1,000 will receive a cheque.

A spokesperson from Waltham Forest Council said: "The council is working with other providers to ensure a provision is in place for the residents of Waltham Forest. We know how important this is. We are currently in discussions with the LCCU about how we may be able to support them in establishing a branch in the borough.

"As a council we support credit unions; they operate on a not-for-profit basis and deliver flexible, easy to understand financial services and provide an invaluable service to the community.

"The council has previously given financial support to the ELCU over several years. Sadly, the cost of funding this merger would have been too high to make it viable and the money would not have gone to the people who needed help the most."

The council added: "Credit unions provide vital services to members of the community who may be financially excluded, deprived, or isolated from the commercial banking system. We as a council continue to support credit unions and are working hard to ensure a facility is in place for Waltham Forest residents."

The council are offering help and advice from the Advice Waltham Forest Partnesrhip. Residents experiencing financial hardships can also apply for assistance from the council's Disectionary Council Tax Hardship Scheme in exceptional circuimstances.

Caroline Rainbird, chief executive of FSCS, said: "FSCS is protecting the members of East London Credit Union Ltd and helping them to get back on track. Our aim is for the vast majority of its customers to get their money back within seven days.

"All members of the credit union need to know that their money is safe and about the safeguards that are in place. Their savings are protected up to £85,000, and joint accounts are covered for £170,000."

According to the compensation scheme, the total pay-out for East London Credit Union is to be just over £2.5 million.

The Credit Union has announced that it is no longer able to offer any accounts to members, and customers are advised to open a new account with another credit union or bank as soon as possible, if one has not been made already.

London Community Credit Union, who share a common bond area with the East London Credit Union, have agreed to accept members who qualify to their area to open an account with them.