It can be all work and no pay in direct sales

Nick Holdsworth explains why it could take several months before you get that first payslip

Graduates are being invited to job interviews with financial services companies unaware that some will expect them to work unpaid initially for several months.

The direct sales jobs with insurance and financial services companies are regulated under the Financial Services Act, but job advertisements sometimes fail to reveal that salaries are largely or exclusively commission- based and fees are not usually paid during training periods of up to a month. Commissions earned as new sales staff pick up experience are not normally paid for at least two months, in case new clients exercise their right to cancel contracts under "cooling off" regulations.

University careers services are aware of the practices, which are not illegal. Some refuse to carry advertisements in vacancy bulletins unless they are explicit about their salary arrangements, and others issue periodic warnings to graduates to "ask searching questions" at interviews.

For the few graduates who are good at selling, the rewards can be high. Fees of pounds 100,000 are not uncommon. But many who accept jobs drop out after a few months.

Lanze Gardiner, a 25-year-old Leeds University law graduate, applied for a job with City Financial after taking his solicitors' finals. He was attracted by an advertisement in Prospects Today, a fortnightly vacancy list published by the Careers Service Unit (CSU), which stated that those aged 23 to 35 "with the qualities of intelligence, personality and ambition" could be set for a career with the company. "Training and opportunity" would be provided by the company but the advert made no mention of salary or the basis for payment.

Mr Gardiner attended an interview at the company's London offices. He spent pounds 50 on rail fares from Leeds. When he asked about travel expenses, he was told that the company did not pay them. At a subsequent interview he was told that he could not expect to earn anything in the first few months. He gave up and moved to London to take up temporary work through an agency.

City Financial, which sells insurance products and provides the sales leads for its workforce, says that graduates are not being misled. Guy Folland, company director, says the firm pays the costs of training recruits up to the first stage of the financial planning certificate, a Chartered Insurance Institute exam, which from last month became obligatory under Personal Investment Authority rules. New sales staff can not expect to earn anything for up to "four or five weeks", but after that will gradually get up to speed.

The firm does not pay interviewees' travel expenses as a matter of policy, but successful applicants are given a non-refundable pounds 300 lump sum to help to support them during training. Mr Folland says that since City Financial works in a competitive market, commissions paid to sales staff can be low in the early months of their careers with the company.

The CSU says that "a number of complaints" from graduates about City Financial have been passed to it by university careers services over the past few years, but its view is that graduates should always ask about travel expenses and salaries before accepting interviews. Employers are asked, but can not be forced, to make it clear when salaries are commission- based.

Margaret Dane, president of the Association of Graduate Careers Advisory Services, says that the practice of expecting new employees to undertake an unpaid period of training is not widespread, but where it does happen companies should make it "absolutely explicit".

Dr Richard Siddall, director of Leeds University careers service, says he does not accept advertisements from direct insurance sales companies unless they detail how salaries are paid. "We encourage graduates to ask searching questions during the interview procedure," he adds.