80 staff enter consultation process in London and Peterborough
Close Premium Finance and Premium Credit are set to fight it out for clients of RBS Finsure, if it closes as proposed last week.
The Royal Bank of Scotland's decision to close RBS Finsure leaves just these two remaining premium finance providers to scrap it out for RBS Finsure’s 6% market share.
The bank began a one-month consultation with its 80 staff based in London and Peterborough last week.
An RBS spokesman denied that the move was part of the disposal of RBS Insurance, including brands Direct Line and Churchill, as reported in Insurance Times last week.
If the proposal is accepted, the company will stop writing new business in early 2010, while existing business, consisting of personal and commercial clients, will be run off over a 12-month period.
Finsure’s current book of business cannot be sold to its rivals because of competition rules.
The company, a subsidiary of insurer NIG, pledged to allow affected staff to apply for alternative roles within the group following the consultation process. It also said that it would begin discussions on the process of redundancy and closure.
RBS Finsure managing director Trevor Brittain said that the recession has had a major impact on all lending businesses. “While Finsure has continued to grow through this period, in the longer-term we do not believe the organisation can sustain a sufficient level of profitable growth to meet our business and capital requirements.
“Therefore, after careful consideration and a detailed review of future requirements and long-term potential, we are proposing the closure of the business. This decision has not been made lightly and we have explored every possible option. However, we sadly have no alternative but to make the announcement of this proposal.”
Close Premium Finance and Premium Credit refused to comment.