Norwich Union hit with £1.26 million fine
Norwich Union has been hit with a £1.26 million fine by the Financial Services Authority for failing to protect its customers from fraudsters.
The fine follows the company falling victim in 2006 to an organised group of scammers who used publicly available information from sources such as Companies House to pose as Norwich Union Life customers.
By providing Norwich Union Life’s call centres with customers’ full names, addresses and date of birth, the fraudsters were able to satisfy the firm’s caller identification procedures and obtain customer information such as policy numbers and bank details.
In total, Norwich Union Life was subject to 74 successful frauds, with a value of approximately £3.3 million.
However, confidential information about Norwich Union Life customers was released in 632 cases, and in total 558 attempts were made to obtain fraudulent surrenders.
The FSA says Norwich Union Life’s system has weaknesses which allowed the fraudsters to impersonate customers and obtain sensitive information leaving its customers more likely to fall victim to financial crimes such as identity theft.
Margaret Cole, director of enforcement at the FSA, says: "Norwich Union Life let down its customers by not taking reasonable steps to keep their personal and financial information safe and secure.”
Mark Hodges, chief executive of Norwich Union Life, has apologised to the affected customers.
He says: “We have extensive procedures in place to protect our customers but in this instance weaknesses were exploited and we were the target of organised fraud.”
The firm says it has now carried out a review of its security measures and improved anti-fraud procedures.
Because it co-operated with the FSA and agreed to settle at the early stage of the FSA's investigation, NU qualified for a 30% discount on the fine.
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.