Credit unions are 'not-for-profit financial co-operatives', owned and run by their neighbours. Though popular in the US, Canada and Australia, they have not really taken off in this country.
Steve Finnigan, president of the Association of British Credit Unions, said: 'As building societies abandon mutual status, credit unions can step into that role. We can teach our members to budget and manage their money, encouratge savings and offer loans they couldn't otherwise get from official sources.'
Patricia Hewitt, treasury minister, is proposing to allow credit unions to borrow from banks. And the Alliance and Leicester building society is currently looking at backing a credit union at a council estate in Leicester, claimed to be the second poorest in the UK.