The news was broken to hundreds of CFS staff, who were summoned to a briefing at Manchester’s Midland Hotel and comes at the end of a 20 month review process following the merger of the former Britannia Building Society with the Co-operative Bank.
CFS said the loss of 670 jobs — with another 82 current Co-op Bank based employees switching to the French insurance giant AXA — was "regrettable" and added that both CFS and its parent company, the Co-operative Group, would seek to minimise the impact of the decision by offering redeployment opportunities within the businesses wherever possible.
A statement issued by CFS outlined the radical changes on the way following the long-running review. The main points are:
• CFS has entered into exclusive talks with Royal London to sell its life insurance subsidiary, including the £15 billion of assets in its Long Term Business Fund (LTBF) and The Co-operative Asset Management (TCAM) which manages the fund
• CFS is also proposing to enhance and extend its 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.
The statement says: "While 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.
"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."
CFS Chief Executive Neville Richardson commented: "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."
Added Mr Richardson: "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."