View From City Road: Beware the knock of the life insurer

Not many people will, but spare a thought for Royal Life's 1,000- strong salesforce. Some time today, at 37 company centres throughout the country, staff from one of Britain's largest insurers will be taking a new set of exams designed to test their professional competence.

Royal Life is adamant that the tests are prompted solely by a commitment it shares with Lautro, the industry watchdog, to higher standards of customer service. If so, there is a remarkable coincidence between today's exams at Royal Life and events elsewhere in the financial services world.

Last week, Nationwide Building Society was forced to take its own salesforce off the road for retraining, following a visit by Lautro. Barclays Life, the life insurance subsidiary of Barclays Bank, was similarly rebuked by its own regulator, the Securities and Investments Board, over a series of failures, including poor training and supervision of staff. In March, Norwich Union, one of the largest insurers, also had to suspend sales staff until they took a fresh set of exams. Despite extensive coaching, many of them failed. If you didn't realise it already, it is now plain for all to see: there is something rotten in the state of Denmark.

For all Royal's protestations, the real difference between itself and the others is one of degree, not of principle. The problems we are seeing in the industry confirm what many observers have been saying for years, that the sharp- suited men and women who knock on our doors trying to sell us insurance, investments and pensions are often abysmally trained and know little if anything about savings and investment.

Training alone is clearly not the solution, however. No matter how well salesmen are taught, ultimately they have to make their living by selling the company's products. If they don't sell, they earn no commission and the company's training costs are wasted. Put in that situation, the temptation for many is to forget whatever they have learnt about good, honest advice. Commission disclosure, due to become compulsory at the beginning of next year, will help but even this will do little to protect the financially illiterate from the financially unscrupulous. Caveat emptor will have to remain the guiding principle when dealing with a life assurance salesman.