Old Mutual eyes furthers costs from OMW platform contract switch

Old Mutual reported its Old Mutual Wealth arm has spent £330m transforming its investment platform and after cancelling a contact to build a proprietary system and move to an outsourced alternative, will need to spend another £120-160m.

Old Mutual said the move will "considerably de-risk" OMW's UK platform transformation, with an customer- and adviser-facing platform supplied by London-based FNZ will be operational for new business by the back end of next year or early 2019, with migration to follow swiftly thereafter.

"Given the cost, effort and time already invested in the programme, we have not taken these decisions lightly," said OMW chief executive Paul Feeney.

"This has been a difficult journey for all stakeholders. We have made tough decisions today but we believe they are the right decisions for our customers, their advisers, our business and our shareholders."

Group CEO Bruce Hemphill said the announcement "shows decisive action and we do not expect these decisions to affect the managed separation of Old Mutual".

OMW said last October that the costs of implementing the platform systems under previous contracts with IFDS and DST could be up to £450m.

The platform from FNZ will include additional functionality that was not included in the previous arrangements, which OMW estimate would have cost another £50m and taken a further two years post migration to deliver.