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Old Mutual Wealth has ditched its IT supplier after problems mounted with a planned tech upgrade.

The wealth manager, which is due to IPO next year as part of Old Mutual plc’s break up plan, has suffered a string of cost overruns and delays on the project.

Last October it said that the upgrade would cost £450m. But in a statement on Tuesday the company warned that sticking with the original supplier, IFDS, would have led to “materially greater” costs.

So it has terminated its contract with IFDS and has instead signed a deal with FNZ, which should put the new system into operation by early 2019.

Costs may rise slightly from the £450m flagged last year. OMW has already spent £330m on the scheme, and the FNZ deal will cost another £120-160m.

Paul Feeney, Chief Executive of OMW, said:

Given the cost, effort and time already invested in the programme, we have not taken these decisions lightly. 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.

Shares in Old Mutual plc, OMW’s parent company, were up 0.4 per cent on Tuesday morning.

Copyright The Financial Times Limited 2018. All rights reserved.

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