“Someone once told me that the definition of insanity is doing the same thing over and over and expecting a different outcome. There are lessons to be learned and these lessons are as much applicable to Fos as to anybody else.”
These are the words of Paul Hudson, chief executive of Cirencester Friendly Society, in relation to a high court ruling against two Fos decisions, which upheld fraudulent claims made against the mutual.
The case involved Christopher Parkin, a former member of the society, who acted fraudulently by answering no to several medical questions in an income protection application.
If he had answered correctly it would have resulted in the income protection application being rejected, according to the judgement.
In August 2007, Parkin brought an initial claim under the insurance on the basis that he could not work because of chronic fatigue syndrome myalgic encephalopathy.
This claim was rejected, but his complaint to Fos resulted in a payout from Cirencester of more than £19,000.
Mr Parkin then decided to make a second claim, contesting that chronic fatigue syndrome made him unable to perform his job; this was again rejected by the society, but - again - his complaint was upheld by the Ombudsman.
This time, Cirencester did not accept this decision and brought the case to the high court - which found that Mr Parkin had defrauded the society and Fos, and ordered that the amount awarded in the first claim be repaid.
Mr Hudson said: “I lived the case for eight years and that is an awful long time to have this type of situation.
“I think Fos is not well placed to deal with fraud. I do not think they have the experience necessary to see through this type of case. They reached two decisions which the judge passed comment on, they had all the papers which the judge had access to but they came to a different conclusion.”
Mr Hudson is no stranger to challenges. Stimulating growth was top of his ‘to do list’ when appointed to as chief executive – a goal he has achieved with some success, he said.
Assets have grown more than threefold to £74.5m, as has membership to 35,000, and premium income has increased by a significant seven times to more than £15m.
The company’s growth is somewhat down to its prudent approach, according to Mr Hudson, who said: “We are not going to speculate with our members’ money because they own the business. If an opportunity comes along I put myself into the members’ shoes and ask myself how they would feel about it.”
The firm’s cautious approach has not stymied innovation, according to Mr Hudson, who has unveiled plans to launch a product aimed at helping people to fund their lifestyle at retirement.
He said: “They used to say friendly societies care for people from the cradle to the grave. If you care for people, why should you stop at retirement?
“People are living longer but when you look at the provisions they are making for the future, many will not be able to afford their current lifestyle. This product helps them to bridge that gap.”