Unity Trust says it expects to follow a new scheme for the Bakers Union with similar schemes for members of the Transport and General Workers Union, the General and Municipal Union and the shopworkers' union, Usdaw. The country's largest union, Unison, has long been involved in developing credit unions in association with local authorities.
One in four employees have joined credit unions where they have been established in workplaces, and Unity Trust expects a similar response among union members.
The British credit union movement has suffered from bitter in- fighting between two national bodies - the Association of British Credit Unions, which aims to promote them to large employers, and the National Federation of Credit Unions, which sees them as an alternative to money lenders in poor communities. Unity Trust has sidestepped this conflict by drafting its own rules that it hopes will be accepted by the Registrar of Friendly Societies, which controls credit unions.
Reductions in the rates of interest and inflation over recent years have favoured credit unions, enabling them to be more cost-effective than commercial lenders. Interest on borrowings is limited to 1 per cent per month. Profit distribution is by way of dividends to its depositors, determined at the end of its financial year, subject to a maximum of 8 per cent a year.
Deposits are currently limited to pounds 5,000, and loans to the value of a person's deposit plus pounds 5,000. These rules will be amended later this year, subject to Parliamentary approval, lifting the maximum deposit to pounds 10,000, and the borrowing limit to 1.5 per cent of the credit union's assets.
Unity Trust is offering central administration, making the credit unions more professional. The bank says that working with larger credit unions, and ensuring all payments come from direct debits or as deductions from pay, will reduce the cost of administration.
British Airways became the first large private sector employer to establish its own scheme as a staff perk two years ago. It now has 800 members, pounds 500,000 in assets - mostly on loan - and takes pounds 61,000 in payroll deductions each month. Depositors are likely to receive at least 3 per cent on their savings when their first dividends are approved later this year.
New schemes can only be established if members can enter into a "common bond", reflecting a community of interest. This is usually an occupation, a locality or an employer, and now, for the first time, a trade union. But under the proposed new controls, the need for a common bond will be replaced by a requirement for any new member to be nominated by two existing members.
Credit unions have been particularly favoured by taxi-drivers, who need the discipline of saving regularly as well as occasional substantial loans. In recent weeks, the National Federation of Credit Unions has been working to create new credit unions for prison officers, authors, illustrators and a Caribbean church.
The Catholic Church has also been very active in promoting credit unions. Father John Lally, of the Sacred Heart church in Leicester, said: "This is no coincidence, and arises from the justice and peace movement. We have asked how to work with deprived areas, and how to help people to help themselves.
"In Leicester, the Caribbean community has used them successfully for 20 years because they had difficulties in getting money from the banks. We want to serve the community."
The ending of the common bond rule could prove the most positive aspect of the change in regulations. Ironically, it may be particularly helpful for poorer communities, where too many people have wanted to borrow money, and too few could afford to make deposits. Now outsiders will be able to deposit money, knowing it could play a part in killing off the loan sharks.
o Association of British Credit Unions, 0171-582 2626; National Federation of Credit Unions, 0191-257 2219.
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