Beneficial Finance to shut offices in Scotland

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HIGH street sub-prime lender Beneficial Finance is closing all of its branches in Scotland, owner HSBC has announced.

The company, part of the bank's HFC sub-prime division, offers unsecured personal loans to borrowers with poor credit histories.

HSBC has admitted most Beneficial Finance branches are to disappear from UK high streets, including all six in Scotland.

A total of 25 staff in the Scottish branches – including outlets in Glasgow, Edinburgh and Dundee – will lose their jobs.

Although the high street branches are closing, two of the the company's three Scottish administration offices, in Edinburgh and Hamilton, will remain open.

In all some 100 branches are closing across the UK, putting 450 jobs at risk. The remaining 26 branches will stay open for the time being but will be closed to new business and are expected to close entirely in time.

A spokesman for HSBC said the decision was a result of the downturn, with more borrowers defaulting on loans and making the business unprofitable.

He said: "This action is not taken lightly but in response to an economic environment that has deteriorated severely in recent months."

The spokesman added that the bank would seek to limit redundancies by placing workers elsewhere in the business.

"While 450 employees of HFC are at risk of being made redundant, all will have the ability to apply for jobs within HSBC and there are vacancies at present," he said. "All affected employees will receive outplacement counselling and redundancy terms, if needed, significantly exceed the minimum."

But Tim Moss, head of debt and loans at, said the news meant that sub-prime and near-prime borrowers now had few places left to turn, with Provident Financial now the only provider lending to high risk groups.

"My biggest fear is that sub-prime borrowers may be forced to borrow from 'loan sharks', or turn to pay day loans if all other traditional sources of credit dry up," said Moss. "Anyone who falls into the sub-prime category and is looking to apply for credit should weigh up the options carefully, and look to curb their spending instead of going further into the red if possible."

Beneficial Finance is the trading name of HFC Bank, which specialises in hire purchase retail credit.

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