A new partnership between Falkirk, West Lothian and Fife councils will complement existing money management services, including anti-poverty and social inclusion partners, and wider support services.

Council Leaders Councillor John McGinty (West Lothian), Councillor David Ross (Fife) and Councillor Craig Martin (Falkirk) are joining forces to set up a new Community Development Financial Institution (CDFI) established for the three areas.

A CDFI offers affordable loans and budgeting advice and helps people access other financial services, such as savings, income maximisation and debt management. CDFIs provide an affordable alternative to high cost short term lenders and mainstream financial service providers whom financially excluded persons cannot access.

The aim is to offer a competitive, socially responsible alternative to non-standard lenders such as payday loans, for Falkirk Council's most vulnerable residents.

The proposed customer groups for the CDFI tend to be people on lower incomes with no record of savings and who have an extremely poor or no credit rating.

Following a successful tendering exercise which was led by Fife Council with representatives from West Lothian and Falkirk councils, Five Lamps was appointed to progress the project.

Councillor Craig Martin, Leader of Falkirk Council said: "Tackling poverty is one of our biggest priorities in the Falkirk area and by creating this new service, we are helping those who have the greatest difficulty in obtaining affordable credit.

“Families are facing real financial problems every day and this can be made worse by payday lenders charging astronomical rates of interest on loans knowing they will struggle to meet repayments.

“Our support for CDFI means we can help everyone affected to move forward positively and help break the cycle of poverty that can cause so much misery for our communities."

Five Lamps is an experienced CDFI lender with wider social, economic and financial inclusion roles. Five Lamps is a registered charity established in 1985 and launched a CDFI in 2004.

Key features of the CDFI operation in West Lothian, Fife and Falkirk would be:

• 4 shops covering Fife (2), Falkirk, and Bathgate for face-to-face service. The shops will operate from 10am to 4pm Monday to Friday, and 9am to 12pm on Saturday. The shops will have capacity for partners to 'hot desk’
• It is expected that 15 new staff will be recruited for the service. In addition each shop will create an apprenticeship opportunity
• A pop up presence in each local area to raise awareness of the service
• Support will be provided to make arrangements with local banks and credit unions to support the establishment of savings accounts
• Full participation in local anti-poverty and financial inclusion partnership work across the three areas
• Five Lamp will actively refer anyone who has not been successful in their loan application to other local advice and support services
• It is estimated that there is a potential social saving to the local economy of £2.5 million, this reflects the amount of money saved in interest by customers who would have potentially borrowed from a more expensive source