PLANS for a ‘Bank of Bournemouth’ supplying loans to local businesses and residents have been held up due to legal issues.
The borough council’s Community Finance Initiative was due to start providing small business loans of up to £10,000, drawn from the authority’s unallocated capital reserves of £15 million, in November last year, in a bid to help emerging entrepreneurs.
However the loans will not now become available until after April 1 this year, when new regulations set by the Financial Conduct Authority come into force.
Council Leader John Beesley said a limited company - Bournemouth Community Finance Company - had been set up and granted a Consumer Credit Licence, but new compliance regulations had yet to be published by the government.
“Consumer Credit Licence regulation is currently undertaken by the Office of Fair Trading,” he said.
“This duty will pass to the Financial Conduct Authority on April 1, and requires a different set of compliance regulations, which have yet to be published by Government.
“Consequently we have decided to wait until the new regulations come into force.
“We shall therefore only need to undertake this work once.”
The pilot scheme, which was due to run until March 2015, will also provide mortgages of up to £150,000 for local residents, helping people get a foot on the housing ladder.
This was due to start in “early 2014” and cllr Beesley said the scheme was on track.
“The council also plans to offer mortgages, which we are able to do under the Housing Act,” he said.
“Preparations to offer mortgages continue, and we are ensuring that all the legal frameworks are completed in time.”
The company will offer residential mortgages only to Bournemouth residents who have been in the borough for a minimum of 12 months.
Bournemouth Council has confirmed that the scheme is expected to bring in a return of £8 million over the next decade.