Business

Government to probe Labour's insurance mis-selling claims

Chuka Umunna
Image caption Shadow business secretary Chuka Umunna named six companies said to be involved in mis-selling

The government is to investigate claims that some of Britain's top employment agencies have been mis-selling insurance to thousands of workers.

The move follows claims in the Commons that top employment agencies have been needlessly selling personal accident insurance to low-paid workers.

The shadow business secretary Chuka Umunna accused the agencies of "profiteering" out of the practice.

But the industry said such firms are doing nothing wrong or illegal.

Mr Umunna named six agencies - Blue Arrow, Acorn, Taskmaster, Randstad, Meridian and Staffline - as being involved in the practice.

He said the insurance was often sold to workers on the Minimum Wage. He said that the personal accident policies were often not needed as workers were already covered by their employers.

"There is even a company - Gee 7 Group - which specialises in putting together these dubious arrangements for agencies," Mr Umunna said in the Commons.

However Gee 7 denied being involved in such insurance policies.

"We have never ever got involved in temporary accident cover," said Jon Pardoe, the managing director of Gee 7.

"We are aware of companies that do it, but we've always disagreed with the principle," he told the BBC. Such cover provides limited benefits and is in most instances unnecessary, he said.

The business secretary Vince Cable said if the practice had been happening, "it would be indefensible, and I think it is unlawful".

"I will commit to ensuring that we have a proper enforcement procedure," said Dr Cable.

He added that the companies would be investigated, and that he would also consider a more broad-based enquiry.

Cover 'appropriate'

The Recruitment and Employment Confederation (REC), which represents recruitment agencies, said the companies concerned were offering a useful service.

Tom Hadley, the REC's director of policy, said many trade unions offer similar products.

"Let's be clear, employment agencies are not doing anything wrong by offering workers the opportunity to purchase accident insurance," he said.

"It's a product that many other organisations offer to their members, including trade unions."

But he added that profiteering was a very serious allegation, and asked Mr Umunna to hand over any evidence he has about the organisation's members.

He also said that many workers need insurance, to cover them for accidents when not at their place of work.

"Personal accident cover can be appropriate for workers in high risk sectors such as rail and construction and can also cover them for accidents off-site that would prevent them from working," he said.

'Margin'

One of the firms under attack from Mr Umunna, Blue Arrow, said the insurance was "offered," not "sold."

"Our consultants are fully trained and regulated in line with the Financial Conduct Authority's guidelines and are not paid commission as personal accident insurance is not a sales initiative," a spokesman said.

"We do not believe that any of our employees take out personal accident insurance without fully understanding the benefits and cost," he added.

Acorn, another agency involved, said it wholly rejected the allegations.

It said it introduced the policies when two foreign workers died in the UK, and their families were unable to fly the bodies home.

In answer to the claims about profiteering, a spokesman told the BBC: "We do make a small margin on the policy to cover the administration of the scheme but that is certainly not the primary reason we introduced it."

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