Shares row clouds Norwich flotation

The planned pounds 4.5bn stock market flotation of Norwich Union, the insurer, was mired in controversy yesterday as it emerged that many thousands of members in line for a free shares bonanza worth at least pounds 500 each may have been fraudulently recruited. Norwich Union yesterday said that it had yet to take disciplinary action against any of its staff for encouraging the sale and fraudulent backdating of insurance policies

Its denials came amid allegations that at least one of its UK offices had written to independent financial advisers encouraging them to sign up new members and send them in under its controversial "pipeline" rule.

It also came as the Personal Investment Authority, the financial regulator, said it was investigating a number of alleged fraudulent "pipeline" applications. It would not confirm that among its members under investigation is NatWest UK. NatWest confirmed it has suspended 18 of its staff for allegedly backdating policy applications.