CFS life and savings review announcement

July 15, 2011

The Co-operative Group has today announced the outcomes from the strategic review carried out by its financial services subsidiary Co-operative Financial Services (CFS) into its life and savings business.

These are:

  • It has entered into exclusive talks with Royal London to sell its life insurance subsidiary, including the £15bn of assets in its Long Term Business Fund (LTBF) and The Co-operative Asset Management (TCAM) which manages the fund.  A further update will be given when these negotiations have completed.
  • CFS is also proposing to enhance and extend its historical partnership with AXA for the provision of in-branch financial advice that exists across the 248 branches of Britannia to its 90 Co-operative Bank branches.

Whilst some competitors have stepped away from providing their customers with access to financial advice, this move ensures CFS customers will continue to have access to a broad range of competitive life and savings products.

It also proposes to withdraw its field-based advisory team, with the regrettable loss of 670 roles, and transfer a further 82 existing Co-operative branch-based roles to AXA.

The strategic review began during the economic downturn and needed to consider the advent of the Retail Distribution Review which proposes significant reforms for the distribution of retail investments.  It continued following the merger of Britannia and the      Co-operative Bank and considered the subsequent investment of more than £700m being made to increase market presence and capability within the retail and corporate banking markets. 

CFS’ successful general insurance business was outside the scope of the strategic review and remains an integral part of CFS’ financial services offering.

AXA and CFS have also agreed that products provided under the agreement will attract   Co-operative membership points, thus ensuring that all CFS and Britannia customers continue to share in the success of CFS’ business. 

Neville Richardson, Chief Executive at Co-operative Financial Services, said:

“We have taken the time needed to consider all our options and find a solution which is ultimately in the best long term interests of our customers and members.  

“We understand that such news may be difficult for impacted colleagues and we have not reached this outcome lightly.  However, we were faced with rising regulatory costs in a business which was increasingly becoming sub-scale.  This move supports our strategy to focus our specific attention on our banking and general insurance areas, where we have a growing and strongly differentiated competitive position.

“With regards to our negotiations with Royal London, our exclusive talks remain ongoing but I genuinely believe that a mutual solution for our life fund would be in the best interests of policyholders and colleagues alike.”  

Consultation with Trades Unions on the proposed withdrawal from direct retail product manufacture and distribution started as part of the business review, and CFS and its parent company the Co-operative Group will seek to minimise job losses where possible. Ongoing support, which includes redeployment options within CFS and The Co-operative Group, will be provided where appropriate to colleagues impacted by this change. 

Any transaction that might ultimately be agreed between Royal London and CFS would be dependent on regulatory approval. 

For further information please contact The Co-operative Group Press Office:

Russ Brady
Tel: 0161 827 5856 / 07880 784442
Email: russ.brady@co-operative.coop

Patrick Tooher
Tel: 0161 903 4187/07831 314671
Email: patrick.tooher@cfs.coop

Andy Hammerton
Tel: 0161 903 3835/ 077994 76977
Email : andy.hammerton@cfs.coop

Notes to editors:

About The Co-operative Financial Services
The Co-operative Financial Services (CFS) is part of The Co-operative Group, which is the world’s largest consumer co-operative with around five million members, over £14 billion turnover, and core business interests in financial services, food, travel, pharmacy and funeral care.  The Co-operative Group has over 5,000 retail trading outlets.

Following the merger with Britannia Building Society on 1 August 2009 CFS is one of the largest and well diversified mutual businesses operating in both retail and corporate markets.

As part of The Co-operative Group, the new business is characterised by its unique ethical and member reward policies and very high levels of customer advocacy.

The combined CFS business has £70 billion in assets, 12,000 staff and eight million customers.  It has over 300 high street branches, 20 corporate banking centres and a major presence in Manchester, London, Leek, Plymouth, Skelmersdale and Stockport. 

It is the only mutual organisation that enables its members to earn financial rewards for the products they hold, as well as giving them the opportunity to have a say in how the business is run.