SOUTHEND Credit Union has gone bust – because too many of its members defaulted on loans Some 1,100 members of the union, set up in 2006 to offer loans and financial services the less well-off, have been told the Financial Services Authority has closed it.

Loans totalling between £20,000 and £30,000 are said to have been defaulted on, leaving the union unable to function. It is unclear whether those with money invested will get it all back.

David Stansfield, one of the directors, said: “In order to grow the business and become viable, we lent money. Initially, we were very nervous about giving out loans. Then we got a bit more confident. In hindsight, we got a bit too confident.”

He said investors had not been told earlier, so they would not panic and withdraw all their money at once.

The not-for-profit organisation offered loans to people who might otherwise have ended up going to loan sharks.

They only had to save with the union for three months before they could borrow, with loans averaging about £500.