Welcome Financial Services could cut 510 jobs

02/09/2009

Welcome Financial Services, which specialises in loans to people who have previously had credit problems, is to close 30 branches and could cut up to 510 jobs as its parent company looks to cut costs in the face of the economic downturn.

In a statement to the stock exchange, Cattles' new management team said it is proposing the closure of the Welcome Financial branches once their leases have expired following a "comprehensive review" of the business.

The company added that it will "enter into a consultation process" with around 510 employees who have been notified that they are at risk of redundancy.

According to the BBC, Cattles, which also owns the Lewis Group, a debt recovery and debt purchasing company, appointed its new board earlier this year in an attempt to cut costs.

In April, an audit revealed that the company's miscalculations meant it had underestimated the amount needed to cover its bad loans by around £700 million, Bloomberg reports.

EuroDebt director Kevin Still said: "Welcome were one of the last well-known lenders to pull out of the subprime market during the credit crunch, resulting in many credit brokers being very limited in the lending products they were able to offer.

"In part, this has resulted in the rise of non-borrowing solutions like Debt Management Plans and IVAs, where people are still trying to refinance to consolidate debt through brokers, but are unable to obtain credit at acceptable rates or not at all.

"It is also apparent that the spotlight is one the debt recovery sector with three large collection agencies; Robinson Way, Intrum Justita and the Lewis Group impacted in very recent times."

Tags; Current UK Economy, Young Family Finances, Credit Card Lifestyle,

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