Fraudster who targeted Friends Prov ordered to pay £5m

Had he worked for RBS he'd have received a knighthood instead

systems and controls ?????

Why were they accepting backdated switch forms without question or challenge??

I quite agree. This sounds like the most basic deception I've ever heard of.

What were last weeks lottery numbers?

I think the basic premise was you would fax a blank but signed switch form to FP, who would then come back to you asking what funds you wanted. You would them tell them the funds after looking at the performance.

I think that was roughly what happened

Either that or the date on the fax header was changed

A very "upmarket" address, and a quite upmarket sum of money.

"Wood had claimed the fraud had netted him only £2 million." But unfortunately Wood didn't understand the Proceeds of Crime Act, which is used to confiscate the illegal property, not just the illegal profit.

If the money is abroad, maybe now he's out (with good behaviour, he should be), he'll go on a foreign holiday to recuperate!

This type of scam caught many Life Offices, from the 1970's until quite recently, and in the 80's and 90's, quite often carried out by 'leading' adviser firms, with the tacit knowledge and support of greedy and dishonest Company Sales Management, seeing only the inflated sales figures, (and of course, the bonuses which went with them) and all at the ultimate expense of the With Profit Policyholders.

Whilst not at all condoning such activity, I think it tells us quite a lot about the stupid and ineffective management of Life Offices in this period and since, many of them at the time Mutual Companies. It seems that Friends Provident were still way behind the times, if they were still allowing this to happen quite recently.

Anoher reason, to add to 100s of others, to avoid at all costs using Life Offices for anything approximating to Investments. Their time has passed, it's another world and they really don't have the foggiest idea what to do about it. My suggestion? Close down as soon as you can find a way out.

@Gerry Cooper.

Yes, I had forgotten, as it was so long ago, that using the time differences between countries around the world permitted switches to be made at historic prices when one knew that a trading area's markets ahead of the UK in time had closed up, and that that increase would not reflect in the unit price until after a requested switch had been actioned. It also meant that falls could be avoided by switching out before that affected the unit price.

I agree with the sentiment that investment and insurance companies do not go well together.

Yes Gerry , the window of opportunity! still a lot of famous folk about who used this little tactic.....no names eh! new model etc!!

@ l'ifa passeport en provenance de France

Too true. Too frighteningly true.

But then, high grade BS will only get you so far and they all get caught out in the end, -

Don't they?

No Gerry!!

They get awards!!

As has been said this is a procedure that was regularly, and legitimately, used in the early 1980s until some companies woke up to their own stupidity. But the people that tended to lose in these situations were the other investors, through inferior performance.

But for the last 13 years we have had a very tight regulatory regime, examining minutely the processes of companies to ensure they were compliant and other investors couldn't lose. I think that is what the advertising brochure maintains. So have Friends been heavily fined from this inept administrative control over a 4 year period, and can all investors be assured that they have not suffered any detriment though the fraud. 4 years is a long time for this to be allowed to go on in a major Provider. Perhaps the FSA should concentrate a little less time on the IFA community and a little more time on the administrative systems of Providers.

And can someone explain why there is a 100% difference between the estimates - FP couldn't be trying a scam on their insurers could they!

I am amazed that this stll goes on in this technological age. It was rife back in the 80s and many a broker consultant smashed his/her annual target by being complicit in this simple scam. Alliex Dunbar had a couple of cases that reached the judiciary but most were just hidden under the carpet.

If you think about it a little it is no different from US hedge funds buying mutual funds "after hours" which the SEC were quite miffed about some years ago.

Oh, and let us not forget the grand daddy of investment bond case law, Fuji vs Aetna Life. The difference here was that the right to deal at historic pricing was containef in the policy. Hey Ho, plus ca change.