Hundreds of the UKís leading employment firms are set to be investigated by the government over claims that they have been guilty of mis-selling insurance to working individuals of the public.
The decision was made today following remarks in a House of Commons meeting that suggested that firms have been selling point personal accident insurance to low income individuals.
Shadow Business Secretary Chuka Umunna has hit out at the firms for ëprofiterringí from low income workers and has called for guilty parties to be severely penalised to remedy the situation.
A number of employment agencies have responded by denying the charges and have cited that there are no elements to their practice that could be construed as either bad or illegal.
Mr Umunna however remains unconvinced and identified six firms as being guilty of misconduct. The six in question are Acorn, Taskmaster, Randstad, Meridian, Blue Arrow and Staffline, though he disclosed his belief that there are many other parties who have mis-sold insurance in the past few years.
According to Umunna, the insurance has been frequently sold to people who work for the minimum wage and said that the insurance was unnecessary as most of these types of employees are covered for the same thing by their workplace.
“There is even a company – Gee 7 Group – which specialises in putting together these dubious arrangements for agencies,” Mr Umunna said in the Commons.
“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.
Business secretary Vince Cable said that the investigation would identify whether the allegations are true, and promised to act fast if they are found to be true on staunch moral grounds.
“I will commit to ensuring that we have a proper enforcement procedure,” said Mr Cable.
The Recruitment and Employment Confederation (REC), the official body for employment firms has rebuked the allegations and have identified that agencies function to provide their customers with legitimate and helpful services.
Tom Hadley, the confederations director of policy, highlighted that a multitude of different trade unions sold insurance packages much the same as the ones being currently scrutinised by the government and stressed that no wrong doing had taken place on the part of employment agencies.
“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.”
He did however outline that he would be willing to co-operate with the government if any allegations were found to be true.
However, he did point out that whilst many individuals might not require insurance in their workplace through employee schemes, that they nevertheless would need it in case of an accident outside their office.
“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.