Financial firms warned of hoax e-mail threat

Published on Wednesday 5 May 2004 01:00

FINANCIAL services companies need to prepare themselves against new threats from con artists using hoax e-mails, an industry expert has warned.

The recent case of arrests in Lancashire for "phishing" - a new e-mail scam which tricks people into divulging their bank details - has highlighted the broad range of risks facing the finance sector, according to Quentin Thom of accountants Deloitte.

He said: "The industry has learned some valuable lessons at the hands of Nick Leeson, at what was then Barings bank, John Rusnak at Allfirst, and the more recent rogue trading affair at the National Australia Bank.

"However, our companies must be prepared for new types of threat, such as the new trend of phishing. One thing that all of these incidents and actions have in common is that operational risk was inherent."

Phishers pose as a bank to request account details by e-mail as part of a bogus security check. Five people were arrested last month in a joint operation between Lancashire Police and the National Hi-Tech Crime Unit.

The investigation followed reports by Smile, the Co-operative Bank’s internet bank, that false e-mails were being sent out to customers. Several other banks have been targeted by the scam, along with auction website eBay.

Speaking at a Deloitte seminar on operational risk, Mr Thom said forthcoming regulations from the Financial Services Authority will put the onus on finance firms to ensure they do not fall victim to scams.

He said: "The impact of failing to address these risks is such that there is no room for error and more and more Scottish organisations are investing a great deal of resources to ensure their houses are in order.

"The evolution of operational risk as an industry-wide risk type will give firms the opportunity and obligation to put in place the appropriate strategies."