Prudential Ordered To Re-Test Its Entire Sales Staff

Prudential Corporation, the United Kingdoms biggest insurance and pensions group, has been ordered to re-test its entire direct sales force after criticism from the chief City watchdog over training and compliance procedures.

All Prudential's 5,500 sales personnel will be tested over two or three days during the summer on key aspects of their financial training.

The Securities and Investments Board has ordered the move because of concerns about the depth of the staff's training in certain product areas.

The criticism comes in a draft SIB report following a routine inspection visit to Prudential earlier this year.

The Securities and Investments Board accuses Prudential of wrongly advising some of its non-taxpaying clients to buy one of its products, the Prudential Savings Account, when other products would have been more suitable. This is because such policies suffer from the underlying taxation on the company's life fund.

 

The Securities and Investments Board also claims the company's sales people advised some clients to buy a second personal pension, incurring new charges, rather than topping up an existing one.

The criticisms are an embarrassment for the company at a time when it is already receiving adverse publicity from the 4bn pensions mis-selling scandal, where it has one of the largest numbers of un- resolved cases. Jim Sutcliffe, chief executive of Prudential's retail operation, insisted the concerns were being addressed urgently.

''There have been some mistakes and we are treating them very seriously,'' he said. ''No one will lose any money because of this.''

Accountants KPMG had been brought in to assist the company, he added. Sutcliffe described the re-testing programme as ''a big, time-consuming and costly logistical exercise''.

He said: ''We may have to withdraw some products from individual salesmen for a while if they fail the test.''

He stressed that, as an immediate precaution, all sales were being checked rather than the normal 50 per cent, as part of a broader upgrading of compliance. Prudential aims to start the tests in the next few weeks and complete it by the end of the third quarter to take advantage of the summer months, when business is usually quieter. In another setback, the SIB has ordered Prudential to carry out a broad investigation of questionable selling practices after a number of mis-selling cases were unearthed at its Sheffield office two years ago.

Prudential has checked 19 branches but the SIB wants more to be covered.