The Financial Services Authority says consumers can help ensure Internet transactions are safe and secure by taking simple precautions when using online financial services. The admonishment comes as the UK watchdog previews its proposals to tackle financial e-commerce risks.
Research commissioned by the FSA shows that four in ten of those using Internet banking or stockbroking services use easily-guessed passwords, such as their name, birthday or the word "password". In a discussion paper published today, the FSA emphasises that Internet security is a responsibility shared between firms and consumers, and sets out what consumers can do to help themselves.
FSA Consumer Director, Christine Farnish, says: "With nearly one in ten Britons using the Internet to carry out personal banking, it is vital that consumers are properly prepared for using online financial services, and understand what they can do to address the risks involved."
As well as the risks many consumers face in using online financial services, the paper also considers the role of firms in putting proper IT controls and systems in place, and ensuring their security precautions are user-friendly in an environment of multiple passwords and PIN numbers.
These requirements are spelled out in more detail in a seperate FSA discussion paper which lays out the options available for adapting regulation to e-commerce.
Philip Robinson, FSA Director and head of its e-commerce theme work, explains: "It is vital that the regulatory framework helps firms and consumers take maximum advantage of the opportunities presented by e-channels such as the internet, digital television and mobile telephony. This paper opens up debate on a wide range of important issues in which firms, consumers and the FSA all have a role to play.”
He says there are now more than 60 banks and 35 stockbrokers providing Internet based services who are regulated by the FSA.
The paper sets out the FSA’s position on IT risk management. It stresses senior management responsibility for setting the control framework, and discusses how the FSA can help promote standards addressing risks faced by firms. The paper further poses a number of questions about the issuance, acceptance and use of digital signatures, particularly money laundering issues.
The watchdog says it is also looking to make effective use of Internet technology in its dealings with firms.