Employment watchdog is investigating claims of mis-sold insurance

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Business Secretary Vince Cable has told MPs that an investigation into alleged mis-selling personal accident insurance by employers is underway.

The case was raised by his Labour counterpart, Chuka Umunna, at question time on 24 January 2014, when he claimed that five employment agencies had been misleading employees into purchasing personal accident insurance.

He specified it was what "employment agencies employing workers on or close to the minimum wage appear to have been doing".

He went on to say that "the charges would take workers pay under the minimum" and condemned the alleged practice as "indefensible" and a form of "profiteering".

The secretary of state agreed: "It would be indefensible and I think it is unlawful."

He also confirmed that it had been brought to his attention: "The relevant body Employment Agency Standards Inspectorate is investigating the individual cases will take enforcement action."

Mr Cable stopped short of committing to a full inquiry, but conceded this might be necessary "if it proves to be a widespread practice then clearly".

Chancellor George Osborne recently signalled his support for an above-inflation rise in the national minimum wage.

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