A NEWPORT firm is one of six companies to be investigated by a government watchdog, after being accused during a House of Commons debate of mis-selling personal accident insurance to employees. The firm denies the accusations.

Acorn Recruitment, whose first branch opened in the city centre in 1992 and still has its headquarters at Celtic Springs, was accused of the practice by the shadow business secretary today, in a question and answer session with the business minister Vince Cable.

Chuka Umunna MP claimed charges for the insurance would bring employees' wages below minimum wage.

A spokesman for Acorn said the company "wholly rejects" the allegations.

"No temps are enrolled in the scheme if the deductions would take them below the national minimum wage," he said. "If such a temp asked us to do so, then we would decline."

Today, Mr Umunna said he has been passed evidence suggesting that employment agencies Staffline, Taskmaster, Randstad, Blue Arrow, Meridian, and Acorn, which now employs around 280 staff across 40 branches in England and Wales, had been mis-selling personal accident insurance to workers "from which those agencies have been profiteering".

Mr Cable said the companies would be investigated, possibly leading to a broader inquiry.

The employment agency standards inspectorate is investigating individual cases and will take enforcement action, he added.

A spokesman for Acorn said the company brought in its Temp Benefits Scheme after two instances in which workers from overseas died while working in the UK, and their families were unable to meet the cost of flying their bodies home.

"Personal accident cover is part of the Temp Benefits Scheme we provide," said the spokesman. "We do make a small margin on the policy to cover the administration of the scheme, but that is certainly not the primary reason we introduced it.

"The Personal Accident Cover can provide cover for income lost much sooner and without the need to determine any liability.

"We cannot speak for other recruiters, but quite categorically as far as Acorn is concerned, there is absolutely no hard sell or concerted marketing activity of our Temp Benefits Scheme – this is clearly evidenced by the fact that only about 10 per cent of our 5,000 weekly temps actually take up the scheme."

The scheme is explained to all workers and they can opt out at any time.

"Acorn does not operate inappropriately or illegally in any way," he said.

The Recruitment and Employment Confederation (REC) represents recruitment agencies and said companies are not doing anything wrong by offering workers accident insurance.

"By offering these benefits employment agencies are giving temp workers the same kind of support as that enjoyed by permanent contracted employees," said Tom Hadley, head of policy and professional services at REC.

"We would like Mr Umunna to share any specific evidence he has to support these accusations against our members."