Money News: Nationwide hit with £1m penalty for 'inadequate' security
Sunday 18 February 2007
Nationwide building society has been fined £980,000 by City regulator the Financial Services Authority (FSA), sending a warning to firms that fail to keep their customers' data safe.
The announcement last week comes after an incident last August when an employee's laptop was stolen. As this contained valuable information, the theft potentially exposed the society's 11 million customers to an increased risk of financial crime.
The City watchdog said it had fined Nationwide for "not having adequate information security procedures and controls".
An investigation into Nationwide began after the FSA learned about the theft, following a break-in at an employee's home. According to the regulator, Nationwide was unaware the laptop contained confidential customer information and so did not start its own probe until three weeks later.
"As technology evolves, firms must keep their systems and controls up to date to prevent lapses in security," warned Margaret Cole, the FSA's director of enforcement.
"We took swift enforcement action in this case to send a clear, strong message to all firms about the importance of [this]."
Nationwide said there had been no loss of money from any account and that the laptop did not contain pin numbers, passwords or memorable data relating to any customers.
"We have extensive security procedures in place, but in this isolated incident our systems of control were found wanting," said Nationwide chief executive Philip Williamson. "We have made changes to fill the gap and improve our procedures further."
Any customer who ends up as a victim of fraud relating to the incident will be fully reimbursed, Mr Williamson added.
Mortgages: A long stretch for first-time buyers
First-time buyers are borrowing a record multiple of 3.31 times their salary for a home loan, figures from the Council of Mortgage Lenders have revealed.
The CML's survey for December 2006 also found that the proportion of income spent by first-timers exclusively on servicing mortgage interest payments rose to 17.9 per cent.
Due to soaring house prices, the CML reported, only 41 per cent of first-timers were able to buy a home in December below the stamp duty threshold of £125,000 (at which point a 1 per cent tax is levied).
"The monthly figures show ... the gradual worsening in affordability for first-timers - and the ever-rising proportion caught by stamp duty," said the director-general of the CML, Michael Coogan.
Separately, government figures released last week showed that the average UK house price has broken through the £200,000 mark.
Payment protection: Capital One fined over loan insurance
A failure to treat customers fairly when selling payment protection insurance (PPI) has landed Capital One with a £175,000 fine from the FSA.
Between January 2005 and April last year, the bank, which provides credit cards, loans and savings accounts, failed to give 50,000 customers important information about PPI, the regulator said.
This meant that people were unable to check what they were covered for and whether there were exclusions in their policies, the FSA found.
PPI is designed to protect you if you fall ill, have an accident or lose your job and can't make repayments on loans. But the cover can be overpriced and is often sold to people, such as the self-employed, who can be disqualified from claiming under the terms of their policy. This has prompted a wide-ranging investigation of the industry by the FSA; last month GE Capital Bank was fined £610,000 for sales breaches.
Capital One has since reviewed its systems and control issues, at an estimated cost - including potential premium refunds and settled claims - of £3m.
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