More than 30 credit unions have signed up to a "landmark" expansion drive which will save consumers up to £1 billion in loan interest repayments in the coming years.
The Government has previously agreed to invest £35.6 million to transform the sector and help it to double its membership by attracting around one million new members over the next five years to add to the one million who already exist.
It wants to see people on low incomes, who often pay a "poverty premium" for loans because they have limited options, becoming less reliant on expensive credit providers such as payday lenders. Estimates have found that the plans will save borrowers up to £1 billion in loan interest repayments by March 2019, compared with the amounts they would have been charged if they had gone to a high-cost lender instead.
The initiative is being managed by the Association of British Credit Unions (Abcul), which confirmed on Tuesday that a first wave of 31 credit unions have joined the scheme, with more expected to follow.
The expansion project will allow credit unions to broaden out their appeal by pooling their resources to offer more "fast and efficient" services and give people more consistency. The project will enable more members to access products such as current accounts and cash Isas using the internet and mobile phones. Credit unions will pass on the benefits that the economies of scale give them to their members, through lower loan rates and better savings returns, Abcul said.
Barry Duggan, manager of Voyager Alliance Credit Union, which serves the passenger transport industry across Britain, said: "We are really pleased to have been selected as one of the first wave of credit unions to join the project.
"Our credit union has always tried to stay at the forefront of new developments and new technologies - for example we were one of the first to introduce the credit union current account - and this scheme will help us to grow further and offer more and better services to our members."
Vincent Thomas, chairman of London Plus Credit Union, said the move will allow the body to expand its services to the whole community as well as people on lower incomes. He said: "This inspirational project will help us to reduce costs and expand our product range as well as helping us to provide the fast and efficient services people expect these days."
Mark Lyonette, chief executive of Abcul, said: "We will be supporting credit unions to offer a much wider range of great value products to many more members from a broad range of income groups. Consumers will soon be able to benefit from the latest online technology to sign up to credit union services such as current accounts, budgeting accounts and cash Isas."
Credit unions, which are mutual financial co-operatives that take deposits and give loans to their members, will also carry out research to find out more about what people want to see from them. The credit union sector is still relatively small compared with other countries such as the United States and Canada, with around 400 unions in the UK.