A policyholder who was legitimately paid over three hundred thousand pounds was paid twice in error. Although this was noticed almost immediately, the policyholder refused to pay the money back and moved abroad. The error was noticed by an experienced staff member. An investigation was carried out and several hundred historical cases of overpayment were uncovered, which, although each quite small, amounted to a further £2.1m.

These over-payments had occurred over a period of several years and had gone unnoticed due to the opacity and complexity of the payment calculation and process. The payments process was different for different product sub-types and for different historical periods, as the firm had gone through several mergers and upgrades in hardware and software without migrating the overall process onto a common platform. The over-payments had not been flagged by the financial reconciliations process which had at its heart a spreadsheet which had not been exhaustively tested at the time. It had been built by one person who had excellent financial skills but lacked IT testing experience. Formal documentation had not been produced, the company’s mandatory IT development procedures had not been followed and the person had built the spreadsheet without consulting anyone within IT governance.

The person had subsequently moved to a different employer a few months after building it and the current users trusted its accuracy which appeared to be correct on a day-to-day basis. The payments process was over-reliant on staff who in many cases did not fully understand the process and were often not experienced enough. Cost cutting had been taking place in that area of the business due to severe financial pressures over many years. As a result of poor salaries and high work pressure, morale was low and staff turnover was high, resulting in most of the experienced staff, whose market value was highest, moving on.

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