RISING numbers of poverty-stricken residents increasingly turning to loan sharks as they struggle through the recession have sparked the beginnings of a new bank in Kent.

It is hoped that a credit union, called Kent Savers, will be up and running by December.

The system, launched by Kent County Council, claims to be a safer method of borrowing for residents who are being turned away by high street banks.

Although it has been established by the council, the union will eventually be run by a board of directors selected for their backgrounds in finance.

Cabinet member for economic development, Kevin Lynes, said: "I know for a fact that in Pembury and Sherwood these people are operating – loan sharks are about.

"I have seen them on the doorsteps and I have spoken to people who have experienced them and it is really not very nice.

"There are a lot of very frightened and worried people out there, because this recession has had such a profound impact on so many people."

The credit union will give residents and small businesses the chance to borrow money from a central pot, currently standing at £400,000.

This will be boosted with savings of householders who decide to invest in the scheme.

The council launched the union after recognising a need for one, through work with residents and businesses to protect them from the effects of the recession.

Those borrowing from the union will do so at an APR of 27 per cent, Cllr Lynes said.

"Some people might look at it and say 27 per cent is absolutely ridiculous – I can go and borrow from the bank at 12 per cent APR.

"The point is these are not people who are able to do things like that.

"We are not talking about people who would normally get their money from a bank."

Cllr Lynes said the credit union will take a more sympathetic view towards those struggling to make repayments, in comparison to some of the threatening methods used by illegal lenders.

Organisers have been given support by the Department of Work and Pensions and are awaiting the final rubber stamp from the Financial Services Authority before borrowing can commence.

Pi Townsend, manager of the Tunbridge Wells Citizens Advice Bureau, said: "Anything is better than loan sharks or door step lenders.

"We think credit unions are in general a good thing and they generally have a good reputation.

"When advising clients, credit unions will be given as an option but we cannot recommend one lender over another."

Anyone wanting to find out more about the Kent Savers credit union can visit the website www.kentsavers.co.uk