Welcome to the first blog from COVER Magazine. From today, COVER is going to produce a weekly blog which will be sent out via email and also made available on the COVER website .
On Monday, it was revealed that the banking giant HSBC had somehow managed to lose a disc containing the details of 370 000 customers between offices in Southampton and the reinsurer Swiss Re in Folkestone. Fortunately, the bank claims it contained minimal customer information and would be useless to criminals. What is most surprising about the episode is that, contrary to original reports, the disc was not sent through an external courier but instead went via standard Royal Mail delivery.
HSBC said the information was needed urgently and, with its usual secure data transfer system not working, the decision was made to burn what was needed to a disc. In the light of the HMRC losing two discs last year and the heightened awareness of data and identity theft, it seems bad enough that that decision was made but the situation soon turned from bad to worse.
For unknown reasons, HSBC declined to give the disc to a member and staff and entrust them to take it personally to Swiss Re’s office. Ok, it is 230 miles and about a three-hour drive from Southampton to Folkestone but considering how sensitive the public are when it comes to having details lost en masse, a tank of petrol is a small price to pay.
A better idea would have been to send it by courier where it would have had to be signed for at the beginning and end of its journey, and would have been tracked throughout. Even the recorded post system provided by Royal Mail which would also have required signatures but, somehow, the decision was made to pop the disc in an envelope and drop it into the office’s ‘post out’ tray, making it not only unsigned for but pretty much untraceable. It was, said a HSBC spokesman, not the bank’s finest hour.
The latest news is that the disc is still lost. The lesson behind all of this would be that despite all the best intentions, the money invested and the time spent, the weakest link in any chain will always be the human element because someone somewhere will always try to circumvent whatever systems have been put in place in the search of a short cut.
In response to the continuing turmoil surrounding the fall-out from the collapse of the US sub-prime market, the Bank of England dropped the bank rate by another 0.25%, hot on the heels of a matching decrease in February. What is interesting about the current churning of the markets is that the whole crisis began to kick off with the collapse of a few sub-prime mortgage companies in the US who had been gambling against the likelihood of falling house prices and rising interest rates.
When these companies went under, banks started to realise just how much debt they had bought in the form of collateral and the growing panic caused a rapid devaluation in sub-prime stock, causing the losses we read and hear about every day. Now it seems like the years of living vicariously on cheap and easy credit have come to an end with wide-ranging predictions that lenders will take a long time, possibly years, to recover their confidence.
Much like the cry of ‘fire’ in a crowded room that causes a more damaging stampede, it seems a fear of failure is what has exacerbated the current market situations. With 20:20 hindsight, maybe some caution in advance on behalf of lenders and borrowers rather than panic after the fact would have avoided the present chaos.
