This means the credit union cannot repay deposits to its 1,250 members.

FSCS says it will compensate “the vast majority” of members , automatically, within seven days using the credit union’s record.

Members of Dial-A-Cab with balances over the £85,000 limit will be contacted directly by the administrators.

People with up to £1,000 in their account will receive a letter to get cash over the counter at their local Post Office.

Anyone with more than £1,000 will receive a cheque for their balance direct from FSCS.

FSCS protects up to £85,000 of savings – double that for joint accounts and has come to the aid of more than 4.5m people since 2001, while paying out over £26bn in compensation.

FSCS expects the total pay-out for Dial-A-Cab Credit Union Limited members to be £21m.

Alex Kuczynski, chief corporate affairs officer at FSCS, said: “Everyone wants to know their money is secure, but they might not know about the safeguards in place.

“FSCS is here to protect members of Dial-a-Cab and get them back on track.

“Their savings are protected up to £85,000, and joint accounts are covered for £170,000, with the majority of customers getting their money back within seven days.”

He added: “Regarding amounts over £85,000, FSCS will protect these if they are temporary high balances, which means deposits made within six months arising from major life events such as house sales or inheritance.

“Any members of Dial-a-Cab who believe this applies to them should claim direct with FSCS.”