AA relaunches its financial services

ROADSIDE recovery firm AA will offer customers branded credit cards and loans as part of its plan to relaunch its financial services division.

Bank of Ireland has agreed a tenyear partnership to offer the products including AA credit cards, loans, savings including ISAs, and mortgages.

The first, the credit card, will launch at the end of this month followed by loans, with mortgages to be introduced next year.

AA had previously offered a variety of financial products but the financial crisis scuppered its previous deal with the collapsed HBOS group seven years ago.

It then worked with a number of different providers, but financial services currently make up less than 1pc of its sales.

This new deal aims to increase this and the AA will market products to its 4m members.

AA executive chairman Bob Mackenzie said: ‘This long-term partnership forms a fundamental part of our growth strategy to transform the AA into a membership club serving a broader range of the UK motorists’ needs. AA Financial Services has, in the past, been an important player in the credit card, loans and savings marketplaces.’

The Bank of Ireland deal follows news earlier this month of an AA joint venture in India with roadside assistance specialist TVS Automobile Solutions.

Liberum analyst Jo Brent said: ‘This partnership, which is effectively a joint venture rather than commission-sharing agreement, should revitalise the sales of financial products.

‘It follows the Indian joint venture as an example of growing long term value and the AA may be able to buy out the partnership at the end of the ten-year period.’

The group, which listed in June last year, was previously owned by private equity and as a result the company was ‘starved of capital’.

The FTSE 250 group underwent a turnaround and restructured its expensive debt.

It floated at 250p last year and yesterday its shares rose by 1.7p to 369.4p.