A Manx Credit Union could be up and running as soon as June this year after the proposal received unanimous support in Tynwald last week.
Peel MHK Ray Harmer introduced the motion to welcome the creation of a credit union and for Treasury to establish any necessary legislation to put one in place.
Mr Harmer said such a move would benefit those on low incomes who could often be prey to doorstep and pay day lenders. He added in the UK around 11 per cent of people had no access to banking and the figure was likely to be similar in the Isle of Man.
He said the Financial Services Authority had approved the credit union and a licence was likely to be issued shortly. In addition, he said, more than 600 people had registered an interest in joining.
Once the scheme is up and running, the plan is to use a computerised system that can be set up anywhere so it could be run from a church hall or community centre, for example.
Treasury Minister Eddie Teare seconded the motion and said the existing legislation surrounding credit unions needed updating.
‘It is a useful alternative for those not able to participate in the traditional banking system,’ he said.
He added he was willing to commit Treasury to establishing a compensation scheme to guarantee the savings of thos using the union. The compensation level is yet to be decided but he thought it was likely to be around the £3,000 mark.
Among the other politicians voicing their support for the move were Geoffrey Boot, (Glenfaba), Bill Malarkey (Douglas South) and Peter Karran (LibVan, Onchan).
Mr Karran said it was regrettable it had taken so long to organise but acknowledged the hard work that was put into making the scheme happen.
‘This is a good day for that section of the community that will benefit and I will be supporting it,’ he said.
Speaking after the Tynwald debate, David Talbot, chairman of the working party supporting the scheme, said: ‘The working party has pretty much fulfilled its remit, which was to establish a need for the service, raise funds and get the legislative change in place for it to happen.
‘There is certainly a need, as we have about 630 people virtually queuing up outside the door, ‘he said.
Now the team’s target is to have something up and running by the time of this year’s TT.
He said the UK trade association for credit unions had already provided them with a model rule book which they had adapted for Manx purposes.
‘We hope it will all be in place in time for this year’s TT, which is tight but we think it is reasonable,’ he said.
One of the major advantages, he said, is that the members can participate in the bank’s running, as a democratic institution. The members all have the opportunity to take part in the various committees or to sit on the board of directors and help to determine policy. So far, 130 people have volunteered their time.
The slogan for the new union is to be ‘Ethical, Local and Professional’.
As for the security of savings, a depositors’ compensation scheme is in the pipeline, but in the meantime the scheme will be underwritten by a trust which will guarantee the safety of any funds.