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Insurance industry

Financial Mis-selling Scandal: Norwich Union to Pay Compensation to Elderly Couple

Strategic Insights

— 1 min read

A shocking case of financial mis-selling has come to light, with Norwich Union agreeing to pay compensation to an elderly couple after one of its salesmen duped them into investing their life savings in a stock market fund. Roger and Elizabeth Corbett, from Dorset, had entrusted UKpound 30,000 to their local building society, Portman Building Society, but were instead sold a Portfolio Bond by Norwich Union's financial adviser, which lost UKpound 7,355 in value.

Key Takeaways:

  • The salesmen wrote out a cheque for UKpound 16,000 from the Corbetts' account, while they thought they were investing with their local building society.
  • The misleading investment, called the Portman Flexible Growth Account, was actually a Portfolio Bond run by CGU, part of Norwich Union.
  • The salesmen earned nearly 7% commission, amounting to more than UKpound 2,000, for duping the elderly couple.
  • The Financial Services Authority is being urged to act to protect consumers, as this loophole could be abused by unscrupulous individuals.
  • The case has been taken up by MP Vince Cable, who says, "It is never appropriate for a financial adviser to complete a cheque for a customer without a third-party consent."
  • Norwich Union has finally agreed to pay back the money, but the Corbetts' son Alan is still waiting for the Financial Ombudsman Service's ruling and for Norwich Union to admit that his parents were mis-sold the bond.

Statistics:

  • UKpound 30,000 - the amount invested by the Corbetts with Norwich Union.
  • UKpound 16,000 - the amount deducted from the Corbetts' account without their knowledge or consent.
  • UKpound 2,000 - the commissions earned by the salesmen for duping the elderly couple.
  • 70% - the minimum amount invested in the Portfolio Bond run by CGU.
  • UKpound 7,355 - the amount of money lost in value due to the investment's poor performance.
  • 7% - the commission rate earned by the salesmen for selling the Portfolio Bond.

Sources:

  • "Financial mis-sell scandal: Norwich Union to pay compensation to elderly couple." Daily Mail and the Financial Mail on Sunday (Copyright 2004).
  • " http://www.thisismoney.com" - See more of the Daily Mail and the Financial Mail on Sunday, or to subscribe to the newspaper.

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