Why was Tesco Bank fined?
The FCA says that the hack was a “largely avoidable incident”, and that fraudsters used weaknesses in the design of Tesco Bank’s debit cards, the system it had in place to prevent financial crime and its financial crime operations team to carry out the attack.
Tesco Bank could have faced a much higher fine of £33.5 million, but received a reduced penalty of £16.4 million because it co-operated with the FCA and compensated affected customers.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “The fine the FCA imposed on Tesco Bank today reflects the fact that the FCA has no tolerance for banks that fail to protect customers from foreseeable risks.
“In this case, the attack was the subject of a very specific warning that Tesco Bank did not properly address until after the attack started. This was too little, too late. Customers should not have been exposed to the risk at all.
“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.”