Figures indicate that the cost of cyber crime to all UK businesses could jump by nearly 40 per cent this year due to an increased threat of cyber crime.
Fintech company Social Media Compliance (SMC) has estimated the cost to the financial services industry could amount to £1.5bn throughout 2017.
Companies in financial services have said they are having to do more to protect clients from cyber attacks, which are quickly becoming more sophisticated.
Andrew Smith, chief technology officer at investment platform Nucleus, said the threat is lessened partly by the increased awareness of the threat.
But he said one of the main vulnerabilities for any firm is a lack of education when it comes to going through the basic lines of defence on a regular basis, such as changing passwords.
As a wise cyber security guru once said to me: ‘You can’t outsource your reputation'.Stuart AndersonMr Smith also pointed out that vulnerabilities in the supply chain can have a knock-on effect on any firm.
“There are lots of good design techniques to limit risk and we actively deploy these and remain vigilant to the threat posed, however, it is a case of limiting rather than eliminating risk.”
Stuart Anderson, head of marketing and communications at Clarion Wealth Planning, said there is a risk that big industry scandals could emerge which could cause customers to refuse to engage with online account servicing altogether.
He also pointed out that many customers are already suspicious about conducting their financial affairs online and could completely lose trust in the sector.
“For financial planners the big risk is that you, or your staff, make an error that leads to a client falling victim to fraud, or that you recommend a provider whose security systems and procedures are found to be wanting.
“As a wise cyber security guru once said to me: ‘You can’t outsource your reputation’.”
Several banking giants, including Lloyds, Halifax and Bank of Scotland, recently fell victim to a cyber attack by a criminal gang, which temporarily brought their digital services to a standstill, according to FTAdviser's parent publication the Financial Times.
Mr Anderson said issues such as identity theft are becoming bigger issues, and added for example, the staff at his firm are reminded to treat all emails with caution, even those purporting to be from colleagues.
His staff will always follow up emailed instructions from clients by calling them to confirm that the email is genuine.
Just last week, discretionary fund manager Hawksmoor warned clients that it had been the target of a cyber attack.
DFM firm Seven Investment Management said concerns about cyber threats prompted it to conduct a review.
Based on the findings, the firm introduced a rolling cyber security improvement program, set up a cyber security committee, and partnered with a third party to monitor the threats.
“Over the past 12 months we have worked hard to educate everyone, however, even in the past year the profile of cyber increased dramatically, so this education will continue to be reviewed and enhanced,” James Crane, head of IT infrastructure and support said.
Marlene Outrim, managing director of Uniq Family Wealth, said steps have also been taken at her firm.
“Our data base and our documents are all cloud based and we employ an IT firm which monitors our server for any anomalies; sometimes they may have detected and eliminated viruses without us actually knowing anything about it.”
The government launched its ‘Cyber Essentials’ scheme back in 2014, which identifies the controls an organisation must have to mitigate the risks from internet-based threats.
Patrick Connolly, certified financial planner at Chase de Vere, said his firm has achieved the government’s accreditation, which he said means clients can feel confident that their data is secure.
Bill Vasilieff, the chief executive of Novia Financial, said his team has seen an increase in the complexity and the frequency of attempted attacks, adding however that his business has never encountered a serious breach.
“We take substantial steps to ensure all elements of our infrastructure are protected.”
He also warned that replatforming could in theory exacerbate the problem, but pointed out that platforms would be aware of the risks and would take steps to combat it.
A report from PricewaterhouseCoopers indicated that cyber security was one of the top concerns for asset managers this year, with many firms planning to invest in cyber security over the next three years.
katherine.denham@ft.com
