The regulators found that some clients of the fast-growing business had been given poor advice and been persuaded to abandon their existing investments to replace them with JRA's own products - known in the trade as 'churning'.
JRA said it was recruiting 400 of the best salesmen and women when it started up - measured as those earning the most commission. It called them partners and offered fancy financial packages, which might have all added up to a hot-house atmosphere.
Most were recruited from Allied Dunbar, the proving ground of two of the founders, and it seems as if at least some yielded to the temptation to return to their old clients and persuade them that the new brand was worth swapping into.
Most investments suffer from such high buying and selling costs that swapping should only be a last resort. Otherwise the only winner is the salesman who passes 'go' again and collects another raft of commission.
In contrast, Clerical Medical recently started setting up its own sales force and insisted that candidates had no previous experience of selling life insurance. It also decided to pay them salaries rather than merely commission.
Allied Dunbar has been tackling the problem from the other end. When a customer asks for a surrender value, a member of the client options team swings into action.
Brian Baker, assistant director at Allied Dunbar, said: 'Most companies believe that good service is sending the client a cheque within three days of a surrender request. This actually means that they are doing everything they can to get rid of the client as quickly as posible. We want to make sure that our clients understand the consequences of what they are doing and give them some other options.'
This sounds like a good idea. The company manages to keep its clients, and clients avoid churning by predatory salesmen. But, of course, it has to be handled sensitively. Investors will always have the right to withdraw and should never be bullied into staying.
But explaining the consequences, and other avenues if the client needs some quick cash or just fancies a change of investment manager, must be a sensible course of action for all concerned - as long as it is done carefully.
Banks, building societies and all sorts of other institutions should perhaps take note and ask clients heading for the exit if there is anything that is going wrong and could perhaps be put right.
A NEW sort of mortgage is on offer from First Mortgage Securities, which rewards loyalty rather than showering the borrowers with cash bribes at the outset.
The debt is cut by 5 per cent every five years, effectively accelerating repayment.
What it comes down to is that, with the standard rate at 7.75 per cent, there is some leeway to give borrowers a little sweetener. This can be in the form of cash or discounts or a longer-term reward.
First-time buyers who are struggling to afford curtains and carpets will always go for the maximum cash upfront, but other buyers should try to take the longer view.Reuse content