I was recently approached by an old friend and his wife who were both in some distress after having had their endowment policy encashed by a fraudster for a total of around £160,000.
In this case, the criminal did not even have a valid address for the policyholder, only his name and date of birth. The insurance company via an offshore call centre then volunteered a staggering amount of personal data in successive phone calls:
1: New correct address.
2: Phone number (which is ex-directory).
3: Wife’s full name.
4: Endowment policy number.
5: Endowment surrender value.
6: Endowment start and maturity date.
7: Full bank details, including account number and sort code.
8: The policy was in joint names.
9: There was no assignment.
10: The policy was not in trust.
11: The premium amount and the fact that it was paid monthly
12: Dates when the last premiums were paid
13: Full details as above in respect of another policy.
We have tapes of the above conversations.
The story continued with obviously forged signatures on a surrender form and an indemnity form witnessed under a forged solicitor’s stamp. Obviously, no checks were made on either.
In fairness, the insurance company duly put the policy back into effect but, having lost faith, the policyholder requested a surrender value and on December 19, 2006 received a written quotation of £162,274, which he accepted and requested immediate encashment.
This payment was finally paid in January at a figure of only £155,900, over £6,000 less than the quote and £3,000 less than had been paid out to the fraudster in October.
When questioning this dramatic drop in surrender values on this with-profits policy, especially when the company press release in January talked of maintained bonuses and good 2006 results, the company reply was of breath-taking arrogance: “It is not our practice to provide a detailed breakdown of the actual surrender value calculations.”
The police will not take up the case on behalf of the policyholder because his policy was reinstated and insist it is up to the insurance firm.
The company, in turn, seems unwilling to take it up with the police, probably preferring to brush it under the carpet, and is trying to persuade the client that this is an isolated case. But I am certain that this is not an isolated case and that fraud is widespread and lack of basic security is endemic. Indeed, two other local cases have come to our attention within the week involving the same insurance company.
I would implore any IFAs who have had similar experiences to give me a call or a fax with basic details, including the identity of the company concerned.