NEARLY £1.8m pounds is being paid out to 4,800 members of the North Yorkshire Credit Union which went bust last week, and it has been revealed the county council will have to write off £200,000.

The Financial Services Compensation Scheme is paying back money to members of the union, one of the biggest in the country, which councillors have been told collapsed because of bad management and bad organisation.

North Yorkshire County Council initially committed the money when the union was set up three years ago.

Kate Bartlett, director of operations for the compensation scheme, said payments were in the post to members, with people owed less than £1,000 being sent a letter to get cash over the counter at Post Offices.

County councillor Gareth Dadd told members of the Executive Committee there was a lesson to be learned.

He said: “If we are committing £200,000 which is not an insubstantial amount of money I hope we will be more robust in following that loan through, it seems to me it is a case of bad management and bad organisation in the former North Yorkshire Credit Union, which is sad to say.”

Coun John Watson said they had spent hundreds of hours trying to sort out the problems. “Obviously this should not happen. I hesitate to say we made mistakes, everybody has tried with the best intentions to keep going.”

The Credit Union was set up as an independent not for profit cooperative, offering financial advice and credit at competitive rates, but was put into liquidation in the High Court last week.

It was the sixth credit union to go bust this year. The collapse has been blamed on high levels of bad debts on loans to members plus inadequate credit referencing and control.

There are now moves to join with South Yorkshire Credit Union to provide services in North Yorkshire. County councilors have agreed to put up £30,000 towards costs.

Coun Carl Les said:”There is a need for credit unions in the county, if we can join with South Yorkshire which appears to be more sustainable that would be a good idea.”