KENT County Council has outlined plans to set up a "bank" through a credit union to offer loans and money advice to residents struggling with their finances.

The idea for a credit union - basically a financial co-operative - is set out in a report to be presented to county councillors this Monday, January 14.

KCC believes that the initiative would help hard-pressed residents who are "locked in a cycle of poverty or exclusion" and often fall prey to high-cost lenders and loan sharks and find themselves in a spiral of debt.

Council chiefs say a credit union could help break that cycle by allowing people to save and borrow on an equal footing.

In addition to offering lower-rate loans, residents would be able to use the union to open savings accounts and to get expert practical financial advice. Any loans would be safeguarded through insurance cover that any credit union must, by law, have.

The report states: "It has always been assumed that Kent is not vulnerable to financial exclusion to the same level as other places. However in certain areas, there are significant problems of debt and financial stress."

It highlights Ashford, Dover, Ramsgate and Margate as areas where there are particular problems.

An estimated £500,000 could be needed to set up the Credit Union.

Cllr Roger Gough (Con), KCC’s cabinet member for regeneration, said: "Our view is that there are some families and individuals with problems around access to work and access to money and we want to ensure as many people as possible can participate in mainstream of life and can contribute to the economy."

The county council plans to carry out a feasibility study to gauge whether a credit union would work and who would use it. If it pushes ahead, it could be up and running by the end of the year.

People who use credit unions enjoy the same protection as high street bank customers. Historically, they date back to the mid-18th century and the creation of "people’s banks" during the depression that followed the Napoleonic wars.