The High Court in London this week agreed to set aside two Financial Ombudsman Service (FOS) awards made in 2010 and 2012 and state that payment could not be enforced against the Cirencester Friendly Society.
High Court Judge Richard Seymour decided that Christopher Parkin, a former member of Cirencester Friendly Society Limited, acted fraudulently when applying for individual income protection insurance cover in 2007, when submitting his claim (which started within two months of Parkin becoming a member) and when involving the FOS.
The Society proactively asked the Court to set aside the two awards arising from Parkin’s complaints to the Financial Ombudsman Service and declare that the awards were not enforceable.
Paul Hudson, CEO of the Society, said: “I am very pleased that the Judge, in arriving at his considered decision, helped the Society to protect the interests of over 34,000 current members and to send a clear message that fraud will not be tolerated as it potentially impacts upon all.
“The Society is committed to supporting its members and the actions of Mr Parkin undermine genuine claimants who rely on the Society when they need our help. For a number of years now we have been very transparent about our claims payment record. In 2014, 94% of claims were paid to the value of £3.3 million in sick pay benefit. As a mutual, the Society is owned by its members and we exist to serve them. We did not enter this action lightly and it has been a long and stressful process but thankfully the truth came out and justice was served.”
The society said that at the outset Parkin’s application involved inadequate disclosure and if complete and accurate information had been disclosed the application would not have been accepted and Parkin would not have been offered membership. The FOS instead required the society to consider the claim (which led to a £19,000 payment which included penalty interest at 8%) and later in connection with a second complaint regarding an on-going claim the FOS wanted the society to pay a further significant sum of money. Believing there to have been fraud against the society and the FOS, the society wanted the court to consider the evidence.
The ruling in Cirencester Friendly Society Limited v Christopher Parkin on 12 May 2015 held that Parkin had defrauded the Society and the FOS, that the £19,000 already paid must be returned to the society and that no payment be made regarding the second FOS award. The society said it was right to say that due to fraud at the application, the contract should in accordance with legal principles be treated as if it had never existed.
Kennedys’ partner, Helen Tilley, who acted on behalf of the Society, said: “Fraud is a serious allegation and is not made lightly. Cogent evidence impressed the Court Judge, and Court proceedings was the appropriate forum through which to consider allegations of this nature.
“The judgment may see renewed confidence in insurers highlighting that the Court is an alternative and appropriate forum to deal with serious fraud allegations.”