There isn't proper regulation and no compensation scheme, so if one does go bust, you might only get half your money back.

Robin Gordon-Walker, FSA

The union is believed to have lent too much money.

If a rescue cannot be set up, then ultimately it will have to go into liquidation," Robin Gordon-Walker, a spokesman for the Financial Services Authority (FSA) told BBC News Online.

"Some individuals have up to �2,000 or �3,000 in there. They go along and say that they want to raise money, for example for their daughter's wedding or for a training course, and they can't access their money."

Community credit

Credit unions - savings and loans organisations where members share a common bond, such as a place of work or where they live - can often be found in the poorest areas of the UK.

In many cases, those who use them do not qualify for a bank loan, and so the credit union can be a lifeline.

In the Irish Republic one in two people is a member of a credit union

Typically very small, with a hundred or so members, many credit unions are run entirely by volunteers.

However some, in Scotland and the north of England for example, are larger, with up to 15,000 members.

"Leeds Council's credit union currently has over 7,000 members," said a spokeswoman for the Association of British Credit Unions.

"But now they have extended it to cover the whole of the city, so anyone living or working there can join. The potential for growth is huge," she added.

Everyday outgoings

The rate of interest charged to borrow money is usually very competitive.

The maximum set out by law is 12.68% a year, but many credit unions ask for less.

The average deposit is in the low hundreds; but members can typically borrow twice that.

The potential for growth is huge

Association of British Credit Unions

"The majority of our members borrow around �500 or �600," Lakshman Chandrasekera, the manager of Camberwell's neighbouring Southwark Credit Union, told BBC News Online.

"Most want the money for everyday outgoings - to pay bills, car repairs and for car insurance, typically."

Southwark Credit Union, along with Southwark Council, the FSA and local MPs Tessa Jowell and Harriet Harman, is involved in drawing up a rescue plan to bail out Camberwell.

But so far cash - whether in the form of money or a longterm loan from the banks - has not been forthcoming in anything like the amount needed.

Now there are calls for the government to put its money where its mouth is and get involved.

A savings culture

UK chancellor Gordon Brown sees credit unions as a vital plank in encouraging a savings culture and protecting the most economically vulnerable from loan sharks.

But unlike with banks and building societies, there is at present very little regulation.

"You can just set one up with very few controls," the FSA's Robin Gordon-Walker told BBC News Online.

"There isn't proper regulation and no compensation scheme, so if one does go bust, you might only get half your money back."

That is set to change from July 2002, when credit unions will be covered by the same compensation scheme as banks and building societies.

Perhaps then credit unions will become as popular in the UK as they are in the Irish Republic, where around half of the population is a member of one.