FSA publishes ìData Security Report 2008î

Powerchex, a UK pre‐employment screening company in the City warns that vetting practices in leading financial institutions are inadequate exposing the UK financial system to the risk of financial crime.

Following on todayís publication of the FSAís ìData Security Report 2008î, vetting company Powerchex alerts financial institutions that they are not doing enough to comply with FSAís best practices. The report is urging firms to change their attitude to data security and do more to prevent their customers falling victim to identity fraud and other types of financial crime.

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ìThis report provides excellent guidance to firms who want to benchmark their vetting practices providing examples of good and poor practiceî says Alexandra Kelly, director of Powerchex. ìeven though there has been a significant improvement in the screening of employees working in the sector, the FSA report highlights that there is still a long way to go before firms are fully compliant with the guidance.î

The findings of the report showed that a number of financial institutions:

ï Allow new recruits to access customer data before vetting has been completed

ï Give temporary staff less rigorous vetting than permanently employed colleagues carrying out similar roles

ï Are failing to consider continually whether staff in higher‐risk positions are becoming vulnerable to committing fraud or being coerced by criminals
Examples of good practice included:

ï Vetting staff on a risk‐based approach, taking into account data security and other fraud risk

ï A good understanding of vetting conducted by employment agencies for temporary and contract staff

ï Formalised procedures to assess regularly whether staff in higher‐risk position are becoming vulnerable to committing fraud or being coerced by criminals.

The findings of the report are consistent with the survey conducted by Powerchex in August 2007 which revealed that 89% of undisclosed criminal records were found on the CVs of temporary employees.

As the City relies more on temporary staff to deliver its back office and administrative work, the findings were worrying. ìMost financial firms have become good at screening their top employees,î said Powerchex managing director Alexandra Kelly.

ìBut an army of unchecked workers are potentially inside the nationís banks and financial institutions. And as our findings showed, potential fraudsters are more likely to come in as temps.î

Speaking at the FSAís annual conference on financial crime Philip Robinson, Director of its Financial Crime and Intelligence division said: ìSome firms have made progress by adopting good practice while others need to do more in this area to ensure that they are treating their customers fairly. Firms getting data security right is a key priority for the FSA and we expect the industry to raise its standards.î

To read the full FSA report, visit: http://