Mortgage alert for 41,000 at the Co-operative Bank

Published 20th Jul 2011

More than 41,000 homebuyers with endowments from Co-operative will have their mortgages sold off to another insurance company.

Co-operative Bank is selling its life insurance and investment business to concentrate on banking, savings and general insurance.

Its £15 billion with-profit funds will be sold along with the £3 billion in its unit trusts. Royal London is being lined up as a potential buyer

Whether the with-profit fund will be closed to new business is not yet known. But investors in closed funds can suffer poor performance.

They are not looking to attract new customers so do not tend to put top fund managers in charge.

The Co-op paid out £31,785 on its 25-year endowment maturing this year. But some funds closed to new business paid out much less.

For example, Life Association of Scotland managed just £24,451 and Britannia Life £25,401. Both funds are part of Phoenix, which specialises in running closed funds.

The figures are based on a man aged 30 when he took out the policy and who paid in £50 a month for 25 years.

To replace its own investment and insurance, Co-op has tied up with Axa, which will sell its products through the 345 Co-op and Britannia branches.

Britannia, the old building society, and Co-operative Financial Services merged two years ago.

Source: ' ThisIsMoney '

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