Irish Life dismissed a member of its sales staff in the Cork area in recent weeks for "inappropriate behaviour" involving clients' money. It is understood that the "behaviour" involved fraudulently encashing customer policies and delays in lodging cash paid by clients with the group.

Confirming the dismissal last night, an Irish Life spokesman said that the group had carried out a full investigation of accounts of all the clients with whom the sales staff member had dealt. "There were irregularities in a small number of cases and these situations have now been corrected. The member of staff has since been dismissed."

Asked about the group's experience of frauds involving customers' funds, the spokesman said that there had only been "a handful of cases" where members of staff have had to be dismissed over the last five years.

"In all cases, the position of the customers concerned has been corrected," he insisted.

Irish Life had a wide range of procedures in place to identify fraud and any misselling by sales staff, he said. These procedures were regularly reviewed to ensure that they were adequate, he added.

"I will not suggest that we are foolproof, but we have very strong safeguards in place and these are always subject to review," he said. Irish Life emphatically rejected recent allegations that the practice of churning by sales staff - persuading a customer to cancel one policy and take out a new one - was encouraged by management. Churning can be used by insurance salespeople to increase their commission income.

The spokesman insisted that the safeguards indicate where churning could have happened and that the company examined situations where it was suspected. If it was found to have happened, strong action was taken against the salesperson involved, he said.

There had been a "cooling-off" period in place for all new policies since the late 1980s to protect customers, he explained. Other procedures include checks on all new policies against existing policies held by the same customer and recent cancellations and annual letters to the client setting out policy details, he said.

Asked whether the group's incentive schemes to encourage high sales levels could encourage churning, the spokesman said the schemes placed equal emphasis on policy persistency - that the customer maintained the policy for the medium to long term. It was of no benefit to the group to encourage sales of policies that were cancelled early, he insisted.