Friends Life to outsource heritage business -1,900 jobs to move

9 November 2011 8:30 am | By Paul McMillan

Friends Life is to outsource the IT and customer service functions of its heritage business to Diligenta.

The 15-year contract will see 1,900 roles transfer across to the outsourcing specialist which will assume responsibility for most of the provider’s protection and individual pensions business and the corporate benefits business that is not already outsourced.

Friends Life says the move will allow it to focus on its new proposition developments, including its workplace saving platform.

Chief executive Andy Briggs says: “We have extensive experience in outsourcing partnerships and a proven track record of success and I am confident that in Diligenta we have a strong partner, with shared service values, who will help drive our business forward.”

Friends Life announced in August its split in operations with four million of the provider’s customers moving into its closed book heritage business.

The 1,900 roles in locations across the UK will transfer across with individuals moved on existing terms and conditions where possible.

The outsourcing will cost the firm £230m in one-off costs and is expected to save £60m a year from 2015.

Friends Life says it is not announcing any job cuts as a result of the outsourcing move, but stopped short of guaranteeing the security of the roles moving to Diligenta. The move is expected to happen in Q1 next year.

Friends Life chief operating officer David Hynam says: “We are not announcing any job cuts as a result of this. It is too early to talk about Diligenta’s plans, Diligenta will now start to come up with the strategy of how to make the migration work.”

The move was announced as part of Friends Life’s interim management statement for the first nine months of 2011. Total sales on an APE basis were £880m, compared to £705m the previous year. UK sales were £547m, compared to £316m the previous year, an increase the firm attributes to the new scale of the business and premium growth from existing corporate pension schemes.

The results also highlight persistency issues the provider has identified in certain product areas which could lead to a hit of between £40m and £70m in its 2011 results. Friends Life says this is due to products no longer being marketed, such as individual pensions and bonds, and adviser activity in the run-up to the RDR.

Friends has also announced the launch of an asset manager, Friends Life Investments, for the second half of next year to support its UK business units.

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