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Over 400 jobs could be lost at the AA insurance call centre in Cardiff.
The company blames a growth in online transactions resulting in fewer purchases made by telephone.
But the Cardiff-based AA Driving School and BSM activities will be retained, with around 150 jobs preserved.
The AA says future insurance call centre activity will be focused at its Newcastle office.
The company says it expects to see a net reduction in its UK call centre staff of about 317 employees. Currently just under 3,000 of its total 8,000 staff work in call centres.
A consultation period is underway.
The decision to scrap plans to award the West Coast Main Line franchise to FirstGroup have been strongly criticised by a North Wales MP.
"To announce something at 12.32am in the first place of such significance to my constituents and people in North Wales is quite frankly scandalous," says Labour's David Hanson, MP for Delyn.
"I think this is a fiasco of monumental proportions from the Government."
"It might be the right decision - we did have some concerns over the loss of the route by Virgin - but the way the Government have handled this needs some answers urgently."
Today it emerged that three Department for Transport (DfT) officials have been suspended after Transport Secretary Patrick McLoughlin laid the blame for the fiasco "wholly and squarely" on the DfT.
A DfT spokesman said: "Three officials involved in the West Coast franchise competition were today suspended by the Permanent Secretary while the full facts are established. No further details will be issued at this time about the suspensions."
Virgin Trains has released a statement welcoming the Department for Transports decision to cancel the competition to run trains on the West Coast Main Line.
FirstGroup said that until it was notified by the DfT last night, it had no indication there were any problems with the franchise process.
The Department for Transport has tonight announced that the competition to run trains on the West Coast Main Line has been cancelled. Transport Secretary Patrick McLoughlin announced that there has been a discovery of significant technical flaws in the way the franchise process was conducted.
Virgin Trains had held the contract, which operates from Holyhead in north Wales to Euston, for the past 15 years. Virgin Trains rival FirstGroup had been awarded the contract and remained confident that they would take over the running of the service in December.
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Three DfT workers are suspended and the competition scrapped after flaws were found in the process that awarded the line to FirstGroup.