As we were going to press yesterday (Thursday), confirmation was received that a credit union based in South Pembrokeshire has got into financial difficulty.

Despite all the efforts by the volunteer board of the Landsker Credit Union, and other volunteers, to recover debts from many of the borrowing members who have borrowed the collective hard earned savings of other members in the community, Landsker Community Credit Union's permission to take savings deposits, also to let saving members withdraw their money as well as to make any more loans, has been withdrawn by the Financial Services Authority.

It is understood that members' savings are protected and these will be returned as action taken by the credit union ensures members will receive their savings via the Financial Services Compensation Scheme.

A letter to members states that: "The Financial Services Authority will only allow LCCU to continue to take loan repayments and to recover bad debts.

"Since May this year, we have recovered or got certain bad debt members back on track to the amount of over £23,000. The amount increases weekly. This debt recovery includes core membership bad debt and the Government Sponsored Growth Fund Lending Scheme, which proved disastrous to so many credit unions."

The letter continued: "The longstanding volunteers of LCCU who have striven to provide this valuable service to others in their community over the past 10 years, are deeply saddened.

"In January this year, LCCU was provided with the funding from the SGEI Credit Union Development Scheme to purchase the lease of the Narberth office and for some refurbishment in order to increase the capital asset base and help the credit union toward future sustainability."

The remaining volunteers of Landsker Community Credit Union would like to make it known that they are giving all possible assistance to the Financial Services Compensation Scheme in order that members' claims will be resolved as quickly as possible.

During the week, the Observer has been contacted by a number of members alarmed at the situation. One who has asked for his name not to be used visited the office, only to find it locked up. He then received a letter informing him of the steps he should take to retrieve his money.

"It is a real nuisance, said the member.

Another reader contacted us asking if wew knew the union "had gone through".

He said: "This is a great shame, as the next step for many who have been using the services of the Credit Union will be the loan sharks."

The Observer also contacted the FSA about the situation, but at the time of going to press had not received any response to our inquiries.