The network will be open to all 1.4 million Unite members, who will be able to open instant access savings accounts. It will offer low cost loans, including pay day loans, at low interest rates.

The union wants the service to be fully operational by the end of 2013 and is launching a consultation with members now to identify how they would like to use the service.

Unite research found members typically borrowed £200 a month in 2011. In 2012, this had risen to £326 a month, with the money borrowed in the third week of the month coming from a variety of sources including payday lenders.

This announcement comes as part of Unite’s on-going efforts to tackle legal loan sharks. The union has recently been lobbying parliamentarians to support legislation that would clamp down on unfair interest rates, reckless advertising and promote debt advice.

Len McCluskey general secretary of Unite said: “It is tough for people to make ends meet at the moment. As prices rise and wages fall, Unite members are telling us they’re running out of options – worryingly, a growing number are reliant on payday lenders charging rip-off rates to help them get through the month.

“Disreputable lenders are taking advantage of people in desperate situations and compounding their problems with high cost loans. We are determined to take on these legal loan sharks by offering finance without fear for Unite members.

“The credit union network will put the needs of members and the community first, rather than the interest of shareholders or City bankers.”