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News

Unencrypted backup brings FSA wrath on stock broker

PGP (GB) : 19 June, 2008  (Technical Article)
Despite no security breaches having taken place, Stock broking firm Merchant Securities is fined by the FSA for having unencrypted back up tapes
Merchant Securities Group has become the first stockbroking firm to be fined by the FSA for weak data security controls and failure to take reasonable care with confidential customer details. Among various security failures, the FSA reported that back-up tapes containing unencrypted customer information were stored overnight in a bag at the home of a Merchant employee.

Jamie Cowper, Director of Marketing EMEA at data protection expert PGP Corporation, has made the following comments:

"What's different about this incident is that, through luck rather than judgement, no breach has occurred. With the FSA now proactively using its powers to safeguard customer information, other financial services companies must take note.

This fine is clearly intended to act as a warning to firms that fail to take data security seriously - the next financial services organisation that suffers a data breach might face a much higher financial penalty.

With corporate data policies increasingly under the microscope, organisations must respond properly to the realities of 21st century information handling. At the very least, it's essential that proven technologies, such as encryption, are deployed to show both customers and industry regulators that the data that they are entrusted with is continuously protected and treated with the respect it deserves."
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