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Thursday 23 May 2019


FCA fines Tesco Bank £16.4m

Written by Hannah McGrath

The Financial Conduct Authority (FCA) has fined Tesco Bank £16.4 million for failings related to a cyber attack in 2016 which left customer data vulnerable.

The financial watchdog issued the penalty to Tesco’s banking arm over its “foreseeable” failure to exercise “due skills, care and diligence” in protecting customers from the cyber-attack.

It had been reported last week that the FCA was mulling a fine as high as £30m, reflecting the severity of the incident, which resulted in hackers making off with £2.26m.

The attack, which occurred over a two day period in November 2016, targeted deficiencies in the design of Tesco Bank’s current account debit card along with its financial crime controls and its financial crime operations team.

The FCA said such weaknesses in Tesco Banks defences left personal current account holders vulnerable to a “largely avoidable incident”.

Mark Steward, executive director of enforcement and mark oversight at the FCA, said the fine reflects the fact that the FCA has “no tolerance” for banks that fail to protect customers from foreseeable risks and added that Tesco Bank had been warned specifically about the issue, which was not addressed properly until after the attack started.

“This was too little, too late”, he said, adding: “Customers should not have been exposed to the risk at all.”

Steward explained that banks must ensure that their financial crime systems and the individuals who design and operate them work to substantially reduce the risk of such attacks occurring in the first place.

“The standard is one of resilience, reducing the risk of a successful cyber attack occurring in the first place, not only reacting to an attack. Subsequently, Tesco Bank has strengthened its controls with the object of preventing this type of incident from being repeated," he added.

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