Mike Wilson, the former Allied Dunbar head who is JRA's chief executive, said Lautro, the life insurance regulator, was concerned about the activities of six salesmen. He said Lautro had identified a variety of failings but he specifically ruled out 'churning' - unnecessarily persuading clients to cash in existing contracts to take out JRA products.
JRA is chaired by Sir Mark Weinberg, a former deputy chairman of the Securities and Investments Board, the senior financial regulator that is anxious to stamp out the frequent abuses in the life industry.
The affair is particularly embarrassing for JRA because it set out to recruit primarily from the ranks of the industry's best salesmen. At the company's launch two years ago, Mr Wilson claimed the average earnings of his salesmen were four times the industry average.
Mr Wilson said: 'Lautro is looking at sales activities that are related to just after the company was set up in 1992. It is not about churning.'
He added that Lautro was looking at the customer files of the salesmen concerned.
The problems at JRA came to light after a Lautro inspection visit last autumn. Investigations are still continuing and any fine will not be decided for some months.
JRA calls its salesmen, who now number about 400, 'partners'. Some rivals have objected that a Rothschilds partner is too grandiose a term for a life insurance salesman.
Many of JRA's initial recruits came from Allied Dunbar, the BAT-owned insurer founded by Sir Mark. Amid the animosity this caused, Allied Dunbar warned that its salesmen were being lured to JRA by 'unrealistic' financial packages that would put them under 'unbelievable pressure to sell'.
JRA has grown very quickly and is expected to announce good new business figures at the weekend. Last year, Jonathan Sheehan, an analyst from Credit Lyonnais Laing, valued the company at pounds 90m.
Lautro has so far fined 15 life insurers, mainly for putting investors at risk by failing to control the activities of their sales representatives. Already this year, the regulator has fined Life Association of Scotland pounds 145,000 and Crown Financial Management pounds 130,000.
The fines have ranged from pounds 45,000 to pounds 160,000. The biggest was levied last year against the direct-selling company Interlife.
Joe Palmer, chairman of the Personal Investment Authority, the proposed regulator for the private savings market, dismissed calls for a new system of statutory regulation yesterday. The PIA intends to issue its prospectus in mid-February and take on its duties within six months.
Speaking at a Life Insurance Association conference, Mr Palmer said: 'Knowing how long it takes for any regulatory system to become at all effective, I find it incredible that anybody should seriously suggest that the best remedy for the problems we know we have is to tear up the system we have got and start again.'Reuse content