By John E. Dunn
17 December 2007
A UK insurance house has been slapped with a record fine by the
Financial Services Authority (FSA) watchdog for incompetent customer
The latest offender is Norwich Union, which allowed fraudsters to
impersonate customers when phoning its call centres, cashing in policies
on an astonishing 74 occasions out of a total of recorded 632 attempts.
The criminals 11 suspects have now been arrested were able to steal a
total of 3.3 million during the scam, which took place in 2006.
The FSA has hit the company with a 1.26 ($2.6 million) million fine, a
record for the UK, and even larger than that levied on The Nationwide
Building Society earlier this year for losing a laptop full of
unspecified customer data in August 2006. The Norwich Union only avoided
an even larger fine of 1.8 million ($3.6 million) by promptly settling
the charges with the industry regulator, and agreeing to tighten up its
One of the most serious charges was that the company failed to react to
the pattern of fraud, allegedly initially only informing customers who
had been or were current directors of the company. In other words, the
company realised fraud was happening but was unable to put in place
extra security to stop further occurrences of fraud from happening.
"Norwich Union Life let down its customers by not taking reasonable
steps to keep their personal and financial information safe and secure,
said the FSAs Margaret Cole.
"It is vital that firms have robust systems and controls in place to
make sure that customers' details do not fall into the wrong hands.
Firms must also frequently review their controls to tackle the growing
threat of identity theft."This fine is a clear message that the FSA
takes information security seriously and requires that firms do so too,"
The Norwich Union for its part claims to have tightened up its
procedures, which appear to have been compromised by the ease with which
criminals were able to use data taken from a variety of public sources
to impersonate policy holders.
"We are sorry that this situation arose and apologised to the affected
customers when this happened.", Mark Hodges, Norwich Union Life chief
was reported to have said. "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," he said using a degree of
The Norwich Union since has refunded stolen money and reinstated the
Visit InfoSec News