Banks make life easy for identity fraudsters

Identity fraud has become a hot issue for some of the high street banking institutions.

Barely a day goes by without something being mentioned in the press about ID fraud. A typical headline followed a recent BBC investigation into high street banks’ handling of financial details, loudly exclaiming that ‘banks dump personal data in the street’.

This is a public relations disaster for the financial services industry. You can imagine what the customers who read this stuff are thinking – if I can’t trust these businesses with my data, who can I trust?

I was shocked by the revelations in this particular story – and ironically it broke at the beginning of National Identity Fraud Prevention Week.

Over the past year there has been a steady stream of information about the dos and don’ts of ID fraud, and fraud in general, from the police, the government and financial bodies.

This advice has centred around protecting our personal data which ranges from our name and address to more specific information such as credit card pin numbers.

ID fraud has been growing at an alarming rate and as a result many people are now investing in shredders or finding other ways to be more careful with their data.

It’s a shame then that so-called trustworthy institutions such as banks have evidently not kept their side of the legal and fiduciary bargain by protecting customers’ data.

There will be further ramifications. The Information Commissioner’s Office says it will be investigating the cases concerned. There is a good chance of serious fines for those involved. The problem is that these are not isolated cases. This looks increasingly like a systemic problem.

At the heart of the issue lies management controls and training. Staff must understand the importance of the information they hold and how important it is to dispose of it securely.

Secure shredding services are now common and most lenders should be taking measures such as this. Mortgage application forms contain vast amounts of data. A mortgage application form would be a fraudster’s dream – all that information in one place just waiting to be cloned.

But this latest media episode unfortunately has the ring of Nero fiddling while Rome burns about it. The BBC’s investigation has been damaging and a substantial public relations exercise will now be needed to restore public confidence that data is being guarded to an acceptable degree.

Many customers who are taking the correct steps to protect their data will quite rightly be outraged at the cavalier approach the high street institutions take to the protection of their data.

The BBC should be congratulated on an excellent piece of investigative journalism. This story has done a great public service and now the financial industry awaits the outcome of the Information Commissioner’s investigation. For a few it will make uncomfortable reading – and rightly so.