Job cuts could leave some needing help to get debt free

Bank workers who are in debt may find they owe more and need debt management plans as a result of losing their jobs.

Such a prospect has grown following news that HSBC is to shed 700 positions in response to new banking regulations in the UK.

From January 2013 it will no longer be permitted for banks to offer free financial advice and in response to this the institution has said 700 posts will go.

These include 460 in the financial advisory section, as well as 240 posts in supporting back-office roles.

Explaining the decision, head of HSBC in the UK Joe Garner said: "These decisions have only been made after very careful thought and consideration for our people, the long term business needs and economic environment."

He added that the UK banking sector is undergoing "fundamental" changes and argued the move is "necessary if we are to continue to keep HSBC on a firm and sustainable footing, not just for today, but also fit for the future".

Staff losing their jobs may face threats including repossession or bankruptcy if they are made compulsorily redundant and in such circumstances, individual voluntary arrangements (IVAs) may be considered.

By freezing interest and reducing the monthly payments on debts, it can help prevent repossessions, while it offers an alternative to bankruptcy that could enable workers to still hold certain professional positions.

Another advantage is that, unlike with bankruptcy, an IVA can be kept confidential.

HSBC employees are not the only bank workers whose jobs are under threat, with Lloyds TSB announcing this week that 15,000 posts are to go as it seeks to cut costs.

Posted by Paul Thacker