With white-collar crime on the rise, you might want to keep an eye on your bank statements and salary slips every month. The life insurance industry and the Association for Savings and Investment South Africa (Asisa) are urging people to be aware of an increase in fictitious policies.
If a policy is submitted by a financial adviser in the name of a person who hasn’t authorised the policy, perhaps forging the client signature, this is clearly fraud. But for a fictitious policy to take effect, there has to be a real bank account or payroll system from which a premium can be deducted every month, which means that someone is paying for this premium without realising it.
Peter Dempsey, deputy CEO of Asisa, says that the majority of these policies are funeral policies written in the low-income market, because premiums are low (usually under R100) and there are no underwriting requirements, which makes these policies more accessible to people living in rural areas. Consumers in higher income brackets can also be targeted, though, so nobody should be complacent.
Dishonest financial advisers are often assisted by syndicates that help them obtain your banking or salary details. Syndicates have obtained details from the government payroll system (Persal), for example.
A case that made headlines in 2008 involved a Kenyan syndicate that operated in South Africa. This syndicate managed to acquire boxes filled with salary slips of government employees in KwaZulu-Natal and the North West Province. These salary slips were sold to unscrupulous financial advisers who used the details on the salary slips, together with a forged signature, to write policies for people without their knowledge.
Life companies have a “zero tolerance” approach to financial advisers found guilty of submitting fictitious policies – criminal charges will be laid and they will be blacklisted by the Financial Services Board. Life companies refund premiums where fraud has been committed.
Dempsey cautions opportunistic policyholders hoping to reclaim their premiums from a policy they no longer want from alleging fraud. If your real signature is on the application form, says Dempsey, you can’t prove fraud.
What you can do
- If you discover unauthorised amounts are being deducted from your salary or bank account, notify your employer and the life insurance company – the name will appear alongside the deduction on your statements – by calling the client contact centre. Most insurers have toll free numbers which you can call.
- Dempsey says if you suspect fraud don’t contact your financial adviser. If they’re involved, you’re providing them with the opportunity to cover up the fraud.
- Check your bank statements and payslips on a regular basis for unauthorised deductions.
- Never provide anyone with copies of your payslip, identity document, passport, bank details, driver’s license or any other type of document containing your personal information unless there is a valid reason and you have verified the credentials of that person.
- If you receive an unsolicited phone call or email requesting personal information for verification purposes your alarm bells should start ringing. A financial institution will only request that you verify your personal details if you have requested information or done a financial transaction telephonically.
- Always dispose of your personal information in a secure manner, such as shredding. In particular, never throw old bank account or credit card statements in the bin at home or at the office.
- Don’t leave personal information lying around on your office desk or even at home.
- Never sign blank documentation or applications for insurance and always make sure you know what you are signing for. When told that you do not need to complete certain fields, draw a line through the field or ensure that “n/a” is clearly written in the fields.
- Make sure that you provide all your correct contact details when completing forms to enable the service provider to confirm your contract with you.
- If you don’t receive your payslip in a particular month, notify your payroll department immediately and also check the next payslips you receive in order to verify deductions.
- When paying premiums or investing money, make sure that you pay the money directly to the insurance company or the investment house.
- Make sure that you receive policy and investment statements directly from the financial institution and make a point of checking all your policies and investments at least once a year. Warning bells should ring if you do not receive annual statements and transactional history directly from your life insurer or investment company.
- Something simple, which children should be taught as well, is to ensure that you have a signature that’s difficult to forge. Signatures that are scribbled and do not show the person’s name are the easiest to forge. Handwriting experts find it easier to identify discrepancies in signatures that are similar to a person’s normal handwriting.