FSA fines Norwich Union Life
Norwich Union Life has been fined £1.26 million by the Financial Services Authority (FSA) for neglecting to have adequate checks and systems in place to prevent a £3.3 million fraud that occurred in its life assurance division in 2005.
The FSA said the fine would have been £1.8 million but due to Norwich Union’s full co-operation with its enquiries and agreeing to settle at an early stage, the fine was discounted by 30%.
The fine is the highest ever fine issued by the FSA for fraud. The fraudsters successfully cashed in the life policies of 74 customers, totalling £3.3 million, by using a selection of publicly available personal information, such as their dates of birth, names and addresses.
The fraudsters also managed to get the call centre operative to change personal information, such as bank account details, on their systems.
Margaret Cole of the FSA said Norwich Union Life let down its customers by not taking reasonable steps to keep their personal and financial information safe and secure. Ms Cole added that it is crucial that companies have robust systems and controls in place to ensure that customers’ details do not fall into the wrong hands.
Ms Cole continued the fine is a clear message that the FSA takes information security seriously and requires that firms do so too.
Mark Hodges, chief executive of Norwich Union Life, said we are sorry that this situation arose and apologised to the affected customers when this occurred. We have extensive procedures in place to protect our customers but in this case, weaknesses were exploited and we were the target of organised fraud. Whilst the number of customers affected is very small compared to the number of policies we manage overall, any breach in customer confidentiality is clearly unacceptable.
A full anti-fraud review has also been carried out within the company.