Mired in controversey and rumour R&SA could do with some straight talking, says Elliot Lane.

The record £1.35m fine levied on Royal & SunAlliance (R&SA) by the FSA has hit staff morale hard. Senior executives admit that it was no surprise, but it couldn't have come at a worse time for the company.

Accusations of pension mis-selling have been bandied around the market, with some stockbrokers claiming R&SA is the "next Equitable Life "and advising share- holders to dump its stock. And then there is Bob Mendelsohn.

A strange call came through to the Insurance Times newsroom last week. An anonymous tip-off, from inside the organisation, said Mendelsohn had not been seen in his office for two weeks and was on "permanent leave ".

It turned out he was on holiday in the US for his daughter 's wedding and also took in some golf with colleagues.

The night of the long knives begins. Spin and counterspin seems to be the order of the day. Personal lines brokers have also called claiming R&SA is trying to retract comments made by finance director Julian Hance's that the "mid-market " broker-sold personal lines business was no longer a focus for the company.

R&SA says direct business will grow but has brokers' wishes at heart, as 85%of its business is through intermediaries. The interim results show a healthy commercial combined ratio of 98.3%which has given senior management "confidence "for the future.

Norwich Union is beating the company on household, but on other areas, R&SA is slightly more secure.

Steve Broughton's surprise retirement after 37 years means a change of the old guard. Chief executive Duncan Boyle has to turn things around quickly -and cut the spin.