'Mistakes' led to failure of North Yorkshire Credit Union
Significant mistakes were made which led to the collapse of North Yorkshire Credit Union, its chairwoman has said.
The credit union informed customers on Thursday that it was no longer able to meet its expenses.
The Financial Services Compensation Scheme said savers would be repaid within seven days.
Janet Looker, chairwoman of the board of directors of the union, said: "There have obviously been some significant mistakes made along the road."
Established in 2009, the credit union stopped issuing loans and accepting new members in October.
Ms Looker, City of York Labour councillor, said: "I suspect one of the mistakes was that we expanded too fast.
"We set up very modestly as the York credit union in 2006 and were managing very gently and growing steady but slowly.
"It may well be looking back, although we were keen to expand into North Yorkshire, it was a very, very large undertaking to do."
North Yorkshire County Council, which gave a loan of £200,000 to the credit union when it first started, said it would be holding an inquiry to find out what went wrong.
Carl Les, its deputy leader, said: "We're annoyed with the credit union that it has got into this position and we're annoyed with ourselves that we didn't have a better handle on it.
"It's not our role to actually manage the organisation but we needed to keep a better eye on it."
South Yorkshire Credit Union said it was now planning to set up branches in York and Scarborough.
Its chief executive Ian Guest said it was working with City of York Council and North Yorkshire County Council to get funding.
Credit unions are not-for-profit co-operatives in which members' savings are used to provide cheap loans.