By Graeme Wearden
Special to CNET News.com
February 14, 2007
Nationwide Building Society, a U.K. financial services provider, has
been fined $1.9 million after a laptop containing sensitive customer
data was stolen from an employee.
The Financial Services Authority (FSA) hit Nationwide with the fine on
Wednesday, following an investigation into the theft, which occurred in
November 2006 at the employee's house.
According to the FSA, Nationwide was guilty of failing to have effective
systems and controls in place to manage its information security risks.
The FSA also discovered that Nationwide was not aware that the laptop
contained confidential customer information and did not start an
investigation until three weeks after the theft.
"Firms' internal controls are fundamental in ensuring customers' details
remain as secure as they can be and, as technology evolves, firms must
keep their systems and controls up to date to prevent lapses in
security," said Margaret Cole, director of enforcement at the FSA.
"The FSA took swift enforcement action in this case to send a clear,
strong message to all firms about the importance of information
security," Cole added.
Nationwide has apologized for the incident and said it has tightened its
security procedures in an attempt to avoid a repeat of the incident.
"We have extensive security procedures in place, but in this isolated
incident our systems of control were found wanting," Nationwide's chief
executive, Philip Williamson, said in a statement. "We have made changes
to fill the gap and improve our procedures further."
It's still unclear exactly what customer data was held on the laptop.
Nationwide insists that the information couldn't have been used to
commit identity theft and says that no customers have lost money as a
Nationwide acknowledged that the employee in question had not been
following its existing procedures at the time of the theft. Although
it's unclear exactly how procedures weren't followed, it seems likely
that the laptop should not have left the company's offices or that the
data shouldn't have been stored there at all.
"We can't comment on any action that may have been taken against the
employee," a Nationwide representative told ZDNet UK.
Graeme Wearden of ZDNet UK reported from London.
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