A new study has found that nearly half of all financial advisers believe they have a role to play in protecting their clients from the considerable financial risks associated with identity theft and personal data fraud.

The same study1 however, conducted on behalf of Zurich Financial Services Australia (Zurich), also revealed almost 40% of advisers believe identity theft is still a personal matter for their clients, despite the continuing growth of the problem, and the possibility of US style rules compelling Australian advisers to manage these risks.

Experts estimate that around 740 million data records were exposed2 during 2013. This figure is expected to grow significantly, driven by the expanding ‘internet of things’ and an increasing reliance on other data led technologies, including RFID chips, commonly seen in ‘tap and go’ credit cards, passports and mobile electronic devices.

According to the US Department of Justice, approximately 7 percent of U.S. households are the victims of identity theft each year3. The magnitude of the problem led to the introduction in mid-2013 of new rules requiring specific categories of financial adviser to develop and implement a written identity theft prevention program on behalf of their clients.

It’s a development we could eventually see in Australia according to Philip Kewin, Zurich’s GM of Retail Life and Investments.

“Whilst most consumers welcome the convenience afforded by online accounts, apps and RFID enabled ‘tap and go type cards, the associated risks of such so much data being shared so easily are often overlooked, “said Mr Kewin.

“Financial products in particular represent a high category of risk, due to the volume of sensitive personal financial and health data often required in establishing investment instruments and life insurance policies, and it wouldn’t surprise me to see some sort of regulatory interest, and possibly action, in this area.

“A digit PIN is often the only line of defence stopping hackers accessing this information, and given the extent to which people tend to choose similar PINs and passwords across accounts, it’s a pretty thin line,” he said.

Even being diligent with your wallet is no longer enough, with criminals using cheap devices capable of reading – or scanning – the chips in your credit and debit cards.

Notwithstanding the obvious and growing fraud risk, a June survey of 203 financial advisers, conducted on behalf of Zurich by Beaton Research and Consulting, found that whilst 45% of advisers felt that this was an area they could add value to their clients financial affairs, 37% still felt it was not their issue to solve.

A more detailed analysis of the results revealed that younger – often more technology savvy – advisers were significantly more likely to help their clients in this area, with 51% of advisers under age 45 believing they should help their clients mitigate such risks. The results also varied by gender, with 58% of female advisers seeing it as a relevant service to offer, compared to only 42% of male advisers.

Mr Kewin said he expected an increasing number of advisers to see the importance of managing this type of risk.

“In my experience the best advisers protect their clients’ wealth and lifestyles by looking at every type of risk that threatens their financial well-being; increasingly that including the risks posed by identity theft.”

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