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To fine or not to fine

The Guardian reports that Norwich Union has been fined £1.26m by the Financial Services Authority for failing to protect customers’ personal details after fraudsters were able to steal £3.3m from policyholders.

The Financial Services Authority (FSA) said the insurer had failed to take reasonable care to look after policyholders’ details and protect itself and them from the risk of paying out policies to fraudsters.

The FSA’s director of enforcement, Margaret Cole, said: “Norwich Union Life let down its customers by not taking reasonable steps to keep their personal and financial information safe and secure. “It is vital that firms have robust systems and controls in place to make sure that customers’ details do not fall into the wrong hands. Firms must also frequently review their controls to tackle the growing threat of identity theft.

Now, a regular IG contributor once told me that the Data Protection Act doesn’t apply to public servants. “Why no!” I exclaimed, “of course it does!” only to be asked if I could point to any public servants who been fined when they had broken it. This hefty fine from the FSA (though a different, better resourced regulator than the information commissioner) draws attention to the HMRC/NIDVA/ etc etc situations. Will there be fines? When setting the fine in this case, the FSA said it had taken into account measures taken by the insurer to mitigate the seriousness of its failing, including reinstating the value of stolen policies and appointing a third party to review its caller identification procedures. Perhaps in HMRC’s case the cock-ups that came after the loss of the 2 discs (sending apology letters containing unnecessary personal information to all families of the nation, and putting some of them in the wrong envelopes to the wrong people, etc) should be taken into account?

Fines bite. But of course they come from the public purse too. WIBBI if we, the Ideal Gov community could think of an even better way of teaching people a lesson? Suggestions please…

Published by Ruth Kennedy on 17/12/07 at 1:55pm

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