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Pru to compensate client after £35k identity fraud

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Prudential is to pay back a couple more than £35,000 in missing premiums after they were victims of identity fraud.

According to a Financial Ombudsman Service decision the couple, known as Mr and Mrs B, took out an endowment policy in 1999 that was fraudulently surrendered in 2008.

Prudential accepted the couple were victims of fraud and offered to pay back the money they lost plus growth and bonuses it would have accrued.

But Mr and Mrs B complained to the FOS that the Pru had allowed the fraud to take place and did not explain how it had happened. They also said they were aware of this kind of fraud across several accounts and questioned why no additional security checks were in place.

According to the FOS, Mr and Mrs B only became aware of the fraud and that their direct debits had been stopped when they recently applied for a new loan.

They said if the fraud had not occurred they would have continued paying monthly premiums and asked the Pru to also make up the £35,600 they would have paid in if the insurer had not cancelled their payments.

Ombudsman Tony Moss ordered the Pru to put back all of the missing premiums, which amount to more than £35,600 and add the bonuses and growth that would have been applicable to bring the policy up to the value it would have had if it had not been subject to fraud.

The insurer must also pay the couple £500 for the trouble and upset it has caused. Prudential is only required to pay back the premiums and the compensation if Mr and Mrs B keep the policy and pay the back-payments minus the cost of six months’ worth of premiums.

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. I do not know the details of the case but wouldn’t most people notice if £370pm stopped being collected from their bank account?

  2. Indeed Ian. However, it would be good to know how the fraud was perpetrated sure;y so that others could watch-out for it. Perhaps it was a close family member hence the desire not to notice the £370pm saving….

  3. Forggive me if it’s changed, but my understanding of the FOS guidance on compensation is as follows:

    1.) The client should be put back into the position they would have been into, had the advice/error not occurred. Which is then clarified to confirm that neother the firm, OR the client should benefit from the mistake from occuring.

    This judgement, completely throws that rule straight out of the window, because this couple have proffitted from the fraud to the tune of £35,600. Surely the compensation should be, that they recieve the growth and bonuses they would have recieved, but as they never paid the premiums, these should NOT be included, as they have already had them and all the benefit from being over £300pm a better off.

    I’m also curious as to how someone could be viewed as not being responsible for not noticing that they had not been paying over £300pm out of their bank accounts for over 7 years. How on earth can the client not be held responsible for not noticing this.

  4. Neil F Liversidge 14th December 2016 at 4:17 pm

    They didn’t notice that they were £370pm better off. Yeah, right. Had the policy not been fraudulently surrendered the clients would have expected the full payout and would have been complaining to the FOS along the lines that “It wasn’t out fault they didn’t take the premiums and we can’t be expected to pay all the back premiums now.” They noticed. They just kept quiet hoping they’d get a ‘bank error in your favour’ type result. In effect it’s worked out for them. When our FOS fees fall due we should all try telling them “The cheque’s in the post” to see how gullible they really are. Who are the biggest mugs though? The FOS to believe such a crock of you-know-what or us to be paying for it with our fees? Disgraceful. For once I find myself on the Pru’s side. They should be allowed to deduct the missed premiums from the payout.

  5. Reminds me of a complaint I had a few years ago.

    Customer had a loan, (he was an Accountant). Last payment rejected which meant there was still a debt, but the banked failed to pick it up. He said nothing.

    Problem was it showed on his credit record. He then applied for a loan.

    Oops.

    He then complained, and demanded the bank fix his credit file.

    Question is how did he not see the payment had rejected, and the payment was still due. A debit and credit for the same amount one above the other is pretty obvious.

    Go figure, as the Yanks would say.

  6. Unless some fundamental detail is missing from the above story, then this is a deeply odd decision. On the face of it, this reeks of haddock…

  7. Somethings missing here. Im pretty sure the FOS would deduct the premiums that they hadnt paid and in effect only award them ‘missed growth’.

  8. Agree with the above comments. Something doesn’t add up, it’s being descriped as ‘Fraud’. That would suggest someone doing something they shouldn’t for gain, who, how? And, as others have mentioned, how did they go 7 years without noticing? No annual valuations from Pru, no direct debits being taken.

    However, the strangest part seems to be FoS’s definition of making sure the client is not worse off. Yes they have missed out on growth but if they haven’t being paying premuims that means they have been better off already.

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