Banks need to be extra careful about managing their investment sales force, because even one bad broker can tarnish an entire bank's reputation.

That's the opinion of William Floyd, a former trust officer for the now defunct Bank of New England who now runs his own firm, Ocean Park Research Inc. in Santa Monica, Calif.

This company tests sales representatives in banks for compliance with banking rules.

Lawsuits and complaints about investments can be especially bad for banks because those who complain often use other bank services such as loans and checking accounts, Mr. Floyd said.

Mr. Floyd believes recent lawsuits, including three pending against NationsBank and its NationsSecurities brokerage affiliate, prove his point that banks are very vulnerable to complaints.

These suits, which cite allegedly improper sales tactics, have been covered extensively by local and national newspapers, and have been the subject of congressional inquiries.

"We've seen from the NationsBank lawsuit that it only takes one [unhappy customer], and that's a scary thought," Mr. Floyd said in an interview last week.

Mr. Floyd's company, which was started in 1987, sends mystery shoppers into bank branches to test bank employees' sales skills and product knowledge, as well as their compliance with banking rules.

All of the company's mystery shoppers have securities licenses from the National Association of Securities Dealers, and many are former compliance Officers or retired examiners from federal agencies that regulate banks and brokerage firms.

Other firms also provide mystery shopping services.

But Mr. Floyd insisted that Ocean Park's service is especially comprehensive because the firm tests every single investment sales representative employed by all of its clients.

The company's clients include such notable names as BankAmerica Corp. and Chemical Banking Corp.

"It's the only way to find that one rogue broker." Mr. Floyd said of his firm's exhaustive approach.

"Sample shopping," in which only some sales representatives are tested, "does not ensure finding the one rogue broker that could cause a Nations-sized lawsuit," he added.

Ocean Park's mystery shopping has proved to be a valuable training and compliance tool for Chemical's brokerage affiliate, said David Frankel, a vice president at the investment services unit.

By providing managers with four-page reviews of each employee tested, the service helps Chemical find out what sales representatives are actually telling customers, Mr. Frankel said.

BA Investment Services also finds the Ocean Park service valuable, said Richard Clark, the brokerage's sales and marketing director.

The company supplements Ocean Park's mystery shopping by employing its own staff to periodically test selected brokers.

BankAmerica also sets the criteria for Ocean Park's mystery shopping, Mr. Clark said.

Some bankers say they shy away from using mystery shopping on every one of their sales representatives because of the price tag.

Whether banks employ their own staff for mystery shopping or hire outside firms like Ocean Park, the price can average around $400 per employee, judging from pricing data supplied by experts.

Many firms recommend that banks use mystery shoppers to test each member of their sales force at least once a year.

Not surprisingly, Mr. Floyd maintains that this kind of regular testing is worth the price.

"Banks that have mystery shopping have less arbitration," he said, referring to arbitration of customer disputes.

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