Zurich slapped with £2.275m FSA fine

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The FSA has fined Zurich Insurance £2,275,000 following the loss of 46,000 policy holders’ personal details.

The regulator said Zurich had failed to have adequate systems and controls in place to prevent the loss of customers’ confidential information.

The fine is the highest levied to date on a single firm for data security failings.

The failings came to light following the loss of 46,000 customers’ personal details, including identity details, and in some cases bank account and credit card information, details about insured assets and security arrangements. The FSA said the loss could have led to serious financial detriment for customers and even exposed them to the risk of burglary.

Zurich UK has seen no evidence to suggest that the personal data was compromised or misused.

Zurich UK outsourced the processing of some of its general insurance customer data to Zurich Insurance Company South Africa Limited (Zurich SA). In August 2008, Zurich SA lost an unencrypted back-up tape during a routine transfer to a data storage centre. As there were no proper reporting lines in place Zurich UK did not learn of the incident until a year later.

The City watchdog ruled that Zurich UK failed to take reasonable care to ensure it had effective systems and controls to manage the risks relating to the security of customer data resulting from the outsourcing arrangement.

The firm also failed to ensure that it had effective systems and controls to prevent the lost data being used for financial crime.

As Zurich UK agreed to settle at an early stage of the investigation the firm qualified for a 30% discount. Without this discount the firm would have been fined £3.25 million.

Margaret Cole, the FSA’s director of enforcement and financial crime, said: “Zurich UK let its customers down badly. It failed to oversee the outsourcing arrangement effectively and did not have full control over the data being processed by Zurich SA. To make matters worse

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