The AA and the Bank of Ireland UK have begun a 10-year partnership to sell retail financial service products to UK consumers.

The 10-year partnership will cover credit cards, loans, saving and mortgages with the first product, a credit card, due to be launched at the end of July.

This initiative is part of the management team’s wider strategy - announced in March - to turn the AA into a membership club serving more of the UK motorists’ needs.

All of the AA branded financial services products currently offered will be brought together, giving it more control over the products it offers customers, as well as the ability to introduce new ones.

Until seven years ago the AA was in a similar joint venture with HBOS, but in recent years, the AA’s financial services offering have been delivered by a number of different providers, resulting in a “fragmented” offering.

BOI UK has more than 10 years’ experience of a similar partnership with the Post Office.

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 market places.

“This new venture builds on the AA’s brand strength and financial services expertise and lays the foundations for the AA to develop a long term strategic financial services proposition. BOI UK has proven skill in delivering successful partnerships, and will provide us with the platform to do this.”

Joe Brent, analyst at Liberum, said: “The partnership will use the AA's brand and the Bank of Ireland's financial expertise and banking licence.

“It is part of the strategy of developing new revenue streams and increasing the club benefits to the AA's membership. The AA has historically sold financial products, but it has become increasingly unimportant (< 1% of sales) and has been through providers in single financial sectors.

“This partnership, which is effectively a joint venture rather than commission sharing agreement, should revitalise the sales of financial products.

“Credit cards and loans will be launched this year and mortgages next. There should be synergies with the existing business, eg loans for learner drives, or mortgages for homebuyers who may also buy home insurance.

“We expect no financial impact over the next five years.  However, it follows the Indian JV as an example of growing long term value and the AA may be able to buy out the partnership at the end of the 10 year period.”