FSA calls for more robust safeguards of consumer data
Firms expected to review the effectiveness of their identity verification procedures, says FSA
In light of its findings from a recent survey of 20 companies that use the internet, telephone or other remote channels to interact with their customers on a regular basis, the UK Financial Services Authority (FSA) has issued a series of recommendations in its Financial Crime Newsletter for firms to improve controls on the authentication and safeguarding of their customer identities.
The survey was designed to assess the effectiveness of firms' procedures to verify the identity of customers, the effectiveness of firms' controls to protect the security data used for authentication and the impact of identity theft on firms. The FSA has recommended that firms should review the effectiveness of their identity verification procedures. The Authority says this can only be done effectively if they: establish a suitable and effective authentication process, protect the personal data held on customers so that it cannot be stolen and/or used to defraud consumers and firms, and help customers to become more security conscious. The FSA also gives examples of good practice guidelines in each of these three areas.
The main areas for improvement identified by the FSA include lack of customer identity verification, staff being given wide-ranging access to data, failure to encrypt databases containing security data and failure by firms to routinely prove their own identity before asking customers to authenticate themselves.
The FSA expects firms to take adequate measures to protect themselves and their customers by assessing the risks associated with using non-face-to-face means of communication. Firms also have a duty to implement appropriate systems and controls, comply with relevant legislation (for example, the Data Protection Act) and, when planning systems and controls to prevent fraud, to take into account the harm to customers and losses to the firm that could arise as a result of identity theft. Firms that use outsourcing or intermediaries are also expected to make sure that appropriate controls are in place throughout the delivery chain. The FSA notes that it has already taken enforcement action against firms where, for example, insufficient protection has been afforded to customer data and has highlighted that it will continue to do so where appropriate.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Saudi Arabia poised to become clean netting jurisdiction
Isda AGM: Netting regulation awaiting final approvals from regulators
Japanese megabanks shun internal models as FRTB bites
Isda AGM: All in-scope banks opt for standardised approach to market risk; Nomura eyes IMA in 2025
CFTC chair backs easing of G-Sib surcharge in Basel endgame
Isda AGM: Fed’s proposed surcharge changes could hike client clearing cost by 80%
UK investment firms feeling the heat on prudential rules
Signs firms are falling behind FCA’s expectations on wind-down and liquidity risk management
The American way: a stress-test substitute for Basel’s IRRBB?
Bankers divided over new CCAR scenario designed to bridge supervisory gap exposed by SVB failure
Industry warns CFTC against rushing to regulate AI for trading
Vote on workplan pulled amid calls to avoid duplicating rules from other regulatory agencies
Bank of Communications moves early to meet TLAC requirements
China Construction Bank becomes last China G-Sib to release TLAC plans
Most read
- Top 10 operational risks for 2024
- Japanese megabanks shun internal models as FRTB bites
- Market for ‘orphan’ hedges leaves some borrowers stranded