Norwich Union Face £1.25m Fine After ID Theft

by Stewart Douglas

Story link: Norwich Union Face £1.25m Fine After ID Theft

Leading insurer Norwich Union has today been fined by the regulatory body the Financial Services Authority following widespread reports of security breaches leading to identity theft amongst a number of its policy holders, in one of the first moves of its kind so far.

The Financial Services Authority today announced it had fined the insurer over £1.25 million in recognition of some £3.5 million of losses to customers as a result of identity fraud conducted through certain of its call centres following serious breaches of security policy.

According to the FSA, lax security procedures at many of the firm’s call centres were to blame for allowing criminals to cash insurance policies of unsuspecting customers, leaving many without cover and out of pocket as a result, which lead to today’s record fine amount imposed.

The Financial Services Authority has labeled Norwich Union as irresponsible and ‘particularly poor’ in its approach to solving the problem, particularly after the illegal practices were brought to their attention earlier in the year.

According to the statistics published along with the fine details, 74 fraudsters out of 632 were successful in achieving their criminal goals, of which eleven have been arrested by police following initial investigations into the crimes.

Whilst the fine will impose a direct financial penalty on Norwich Union, it is thought that the revelation of the extent of their lax procedures would be more cause for concern, and potentially more damaging for the reputation of the company in the long run.

Speaking today on the matter, chief executive Mark Hodges offered an apology to aggreived customers. “”We are sorry that this situation arose and apologised to the affected customers when this happened. 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.”