"Regulated firms are on the hook, regardless of whether they outsource or not."
The FCA has fined Equifax £11,164,400 for failing to manage and monitor the security of UK consumer data it had outsourced to its parent company based in the US.
The breach allowed hackers to access the personal data of millions of people and exposed UK consumers to the risk of financial crime.
In 2017, Equifax’s parent company, Equifax Inc, was subject to one of the largest cybersecurity breaches in history. Hackers were able to access the personal data of approximately 13.8 million UK consumers because Equifax outsourced data to Equifax Inc’s servers in the US for processing.
The UK consumer data accessed by the hackers ranged from names, dates of birth, phone numbers, Equifax membership login details, partially exposed credit card details, and residential addresses.
The FCA says the cyberattack and unauthorised access to data was "entirely preventable". Its investigation found that Equifax did not treat its relationship with its parent company as outsourcing. As a result, it failed to provide sufficient oversight of how data it was sending was properly managed and protected. There were also known weaknesses in Equifax Inc’s data security systems and Equifax failed to take appropriate action in response to protect UK customer data.
Equifax did not find out that UK consumer data had been accessed until 6 weeks after Equifax Inc had discovered the hack. The firm was informed about the incident approximately five minutes before it was announced by the American parent company. This meant Equifax was unable to cope with complaints it received when the incident was announced, leading to delays in contacting UK customers.
Following the cybersecurity breach, Equifax made several public statements on the impact of the incident to UK consumers which gave an inaccurate impression of the number of consumers affected. The FCA says Equifax also treated consumers unfairly by failing to maintain quality assurance checks for complaints following the cybersecurity incident, meaning complaints were mishandled.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: "Financial firms hold data on customers that is highly attractive to criminals. They have a duty to keep it safe and Equifax failed to do so. They compounded this failure by the ways they mishandled their response to the data breach. Regulated firms are on the hook, regardless of whether they outsource or not.
"The risk of identity theft never stops. Cyber criminals are sophisticated and innovative; it is imperative that firms maintain the highest standards in data protection."
Jessica Rusu, chief data, information and intelligence officer, added: "Cyber security and data protection are of growing importance to the security and stability of financial services. Firms not only have a technical responsibility to ensure resiliency, but also an ethical responsibility in the processing of consumer information. The Consumer Duty makes it clear that firms must raise their standards."
