The BBC’s business editor Robert Peston said the deal, creating a company with more than 11,000 employees, would value the AA business at about 3.3bn.

Private equity firms Permira and CVC bought the AA for 1.7bn in 2004.

But the deal proved after the firm cut 3,000 jobs, and union officials criticised Monday’s merger.

Union campaign

The deal values Saga, which was bought by private equity firm for 1.35bn in 2005 and had been recently a flotation, at about 2.8bn.

Following the deal, Permira and CVC will own 42.5% of the business, while Charterhouse will hold 37.5% and the management and staff of both businesses the remaining 20%.

DETAILS OF NEW BUSINESS 11,000 staff Valued at 6.15bn Profits of 430m 17 million members and customers

Saga was founded in 1951 as a single hotel in Folkestone, but now has a database of 7.6 million customers and more than 2,500 staff.

Trade unions have led a high-profile campaign against job losses at the AA, which they have cited as an example of what they say is ruthless cost-cutting by private equity firms.

The GMB union said it would seek talks with Saga in an effort to reverse previous job cuts and to improve working conditions for staff.

The union also criticised what it claimed were the large sums set to be made by private equity bosses from the deal.

These are two great brands, in different and business areas Andrew Goodsell, Saga chief executive Saga-AA deal pays for staff

“This shows the extent to which we have entered a casino economy,” said GMB official Paul Moloney.

“This money was made on the back of 3,500 sacked workers, cuts in the pay of call centre staff, the elongation of the working day for the patrols and a decline in the service to the customers.”

AA managers argued the firm’s financial and operational performance improved significantly after the 2004 takeover although it saw the business take on more than 1.3bn in debt.

Saga believes it can help the AA sell more financial products

The head of Permira, Damon Buffini, was one of the four leading private equity bosses who appeared before MPs recently to defend the industry’s record on managing businesses.

They also defended the amount of tax that private equity firms and their bosses pay.

Our business editor says the deal shows that the business has increased in value, but he adds that the sale is likely to reopen the debate about how much private equity firms make from such investments.

Growth plan

Saga chief executive Andrew Goodsell will run the combined business following the deal, while AA chief executive Tim Parker is to leave the company.

Mr Goodsell said the deal would enable each business to retain its own identity while allowing them to cross-sell insurance and other financial products to each other’s customer base.

“These are two great brands, in different and complementary business areas but they have many features in common,” Mr Goodsell said.

“Both organisations can grow and benefit from sharing expertise and systems.”

The headquarters of the combined business will be in Folkestone - where Saga is currently based - but the AA’s headquarters in Basingstoke will continue to operate and the two firms’ various call centres will remain open.

Michael McCrea, 48, was extradited from Australia after being accused of killing his Singaporean chauffeur and the driver’s four years ago.

The salesman from Nottingham admitted two lesser charges of culpable homicide not amounting to murder on Monday, according to his lawyer, Kelvin Lim.

He faces up to 10 years in jail and a possible fine for each charge.

‘Sudden fight’

McCrea, a Falklands War veteran who is a former insurance salesman and financial adviser, is accused of killing Koh Nai Guan, 46 and Lan Ya Ming, 30, on 2 January, 2002 during a quarrel.

His lawyer has said McCrea was defending himself from “a sudden and grave provocation” by the couple, and their deaths arose from “a sudden fight”.

Mr Lim confirmed that a plea bargain had been accepted and said Koh Nai Guan had attacked his client with a flower vase and a chair, injuring McCrea, who then “fought for his life in self defence”.

“My client attacked in self defence and there was no intention to cause death,” said Mr Lim.

Death by hanging

The decomposed bodies of the victims were found in a Singapore car park.

McCrea’s girlfriend Audrey Ong was also arrested and is currently serving a 12-year jail sentence for helping dispose of the bodies and destroying evidence.

McCrea faces two charges of disposing of the bodies and evidence and is due to appear in court again on Thursday.

Death by hanging is the mandatory penalty for people convicted of murder and drug in Singapore.

Mr Lim said the case had been adjourned until Thursday in order for the defence team to make a mitigation plea relating to the claim that McCrea acted in self defence.

A number of residents have contacted the Officer of Fair Trading (OFT) about intimidating tactics used by the firm.

say they are being pressured into giving their financial details to sign up for the insurance which, in many cases, they might not need.

Anyone who thinks they need extra cover should get other quotes, the OFT said.

Uncompetitive warranties

The off-island company is trying to sell insurance that covers repairs after the manufacturer’s ends.

OFT Chairman Quintin Gill said costumer should check they actually need extra insurance before deciding whether to buy cover.

“Don’t be pushed into something until you’ve had a chance to think it through and be very wary of supplying your financial details over the phone to companies that cause you any concern whatsoever,” said Mr Gill.

In 2005, the Commission carried out an inquiry into the 900m a year market in the UK.

The Commission inquiry branded the sale of extended warranties “unfair and uncompetitive.”

Peter Vicary-Smith is the new head of Which, formerly known as the Consumers’ Association.

He replaces Dame Sheila McKechnie, who died in January.

For nearly fifty years, Which has been one of the UK’s most powerful consumer voices.

As National Consumer Week draws to a close and the Financial Services Authority (FSA) prepares to start regulating mortgages from 31 October, Mr Vicary-Smith tells BBC News there are plenty of battles for Which to fight.

There is still something rotten at the heart of UK financial services.

All too often banks and insurers are looking to just make a quick profit from their customers.

There is little thought given to the lifetime value of a customer.

The way financial services are sold needs to change, we need to get away from commission based selling

Treat a customer right and price yourself competitively and you will keep their business for many years and make more money in the long run.

Many retailers get this lesson but not financial firms.

Only if this short-term mindset changes will confidence return to UK savings and pensions.

We would like to see much more transparency in the credit marketplace.

It is often difficult for consumers to tell how much a loan or credit card will cost them.

In addition, lenders need to drop their policy of charging people penalties for repaying a loan early.

The way financial services are sold needs to change. We need to get away from commission-based selling.

Financial advisers recommending products, purely so that they can earn fat commissions, has done a great deal of damage to consumers.

The FSA has a conflicting remit.

Any reforms of the UK financial services system has happened after a scandal has broken

It is meant to protect consumers at the same time as promoting UK financial services.

Experience has shown that this circle cannot be squared.

If, for example, the FSA becomes aware that a UK bank or insurer is in difficulties does it reveal this in order to protect the interest of consumers, in the knowledge that it may sound the death knell of the institution?

It boils down to one question, where does the prime duty of the FSA lie, with consumers or the industry?

Any reform of the UK financial services system has (only) happened after a scandal has broken.

Regulation has been reactive rather than proactive.

Admittedly, the FSA has suffered from the fact that it has only had sway over part of the financial services industry.

Taking over the regulation of mortgages is an enormous task as peoples’ homes are their biggest asset and the scandal over endowment mortgages has shown the damage that can be done by mis-selling.

We recently launched our bite back programme - an online with our members.

The idea of bite back is to see what is on the minds of our members.

From surly shop assistants, food labelling to internet spam, people feel the drip, drip, drip of daily irritations

So far bite back has shown that members feel that many UK businesses and public bodies have little respect for them.

From surly shop assistants, food labelling to internet spam, people feel the drip, drip, drip of daily irritations.

The concerns may not be major on their own but combined they highlight a culture of lack of respect for the consumer.

We plan to base our future campaigns on the feedback we receive through bite back.

My clout comes from 950,000 Which members.

We can make a real difference and have done so on many occasions in the past.

We are one of very few groups that has new powers under the Enterprise Act to request an Office of Fair Trading (OFT) investigation, a process known as a .

The right to make a super-complaint gives our members a direct route to the government and ensures that a major issue will be .