Norwich slashes branch offices: Tougher regulations prompt insurer to abandon commissions for sales force

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The Independent Online
NORWICH Union is closing more than half its direct sales branch offices and abandoning its policy of paying its sales force through commission because of the tougher regulatory regime imposed by the Personal Investment Authority. The restructuring will cut the number of branch offices from 25 to 12 and more than halve the number of branch managers from 115 to 50.

The managers will be either redeployed or offered redundancy. The 400 commission-only salespeople working through the branch network will be offered positions in a new sales force, Norwich Union Financial Services. They will be paid via a salary plus a bonus, and will work from warm leads generated from NU's existing customer base.

Philip Scott, general manager, said there would not be a job for everyone in NUFS. Those who do not find jobs there will be offered posts elsewhere in the company.

The scaling down of NU's direct selling operation comes barely a month after the company was forced to retrain its entire sales force following intervention by the life assurance regulator, Lautro.

It was also fined a record pounds 300,000 because of training irregularities.

The sales force was set up about three years ago. The branch mangers that are made redundant are expected to be offered terms of between three and four times the statutory minimum.

The new disclosure regime will mean that for the first time life assurers will have to tell customers before they buy a life or pension policy what the company's expenses are, including commission.

Direct sales forces are considered to be an expensive method of distributing products, and consumers may simply not buy products when they realise how high the expenses are.