The Co-operative Group is making 670 financial advisers redundant as it announces plans to sell its life arm to Royal London and a seven-year distribution partnership deal with Axa Wealth.
The Co-op 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 and The Co-operative Asset Management which manages the fund.
The announcement follows a strategic review of Co-op’s life and savings business. Staff were notified of the move at meetings this morning.
It will see the withdrawal of of Co-operative Financial Services’ field-based advisory team, leading to 670 job losses.
A further 82 branch-based advisers will offer Axa products, under a partnership deal between Axa and Co-op which will see Co-op’s branches offering Axa’s investment, pension and life assurance products. Axa will also deploy 325 advisers across the branch network.
CFS’ general insurance arm was outside of the scope of the strategic review.
The deal echoes the existing arrangement CFS subsidiary Britannia Building Society has with Axa.
CFS launched a strategic review of its life and savings business in October 2009, after merging with Britannia in August 2009.
The move follows the sale of Co-op Bank’s IFA arm to Ashcourt Rowan Financial Planning last September.
CFS chief executive Neville Richardson says: “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.”
Unite national officer David Fleming says:”The employees potentially affected by this news will be deeply concerned and upset. Unite has already made clear that the decision to cease to be a provider of life assurance products is a very sad and monumental moment in the history of CFS and the whole of the co-operative movement.
“Unite is now pushing for redeployment options wherever possible and to where this is not possible, for all involved to be treated fairly during the process.”