Capita faces record £14 million ICO fine after ransomware attack exposes personal data of 6.6 million

UK’s largest outsourcing firm Capita has been fined £14 million by the ICO following a severe ransomware attack that compromised personal data of over 6.6 million individuals, highlighting critical cybersecurity lapses and regulatory repercussions.

Capita, the UK’s largest outsourcing firm, has been handed a record £14 million fine by the Information Commissioner’s Office (ICO) following a significant ransomware attack in March 2023 that exposed personal data belonging to 6.6 million individuals. This penalty marks the largest ransomware-related financial sanction ever imposed by the ICO, underscoring severe deficiencies in Capita’s cybersecurity measures and incident management.

The breach occurred when an employee inadvertently downloaded a malicious file, triggering a high-priority security alert. Despite this early warning, Capita delayed isolating the compromised device for nearly 58 hours, allowing hackers to move laterally through the network, escalate privileges to administrator level, and extract nearly one terabyte of sensitive data. This data included pension records, staff details, financial information, and highly sensitive categories such as criminal records, race, religion, and sexual orientation. The subsequent ransomware deployment completely locked the company out of its systems, exacerbating the impact.

The ICO’s investigation highlighted multiple failings in Capita’s cybersecurity framework: inadequate tiering of administrative accounts enabled unfettered hacker movement; there was an infrequent and insufficient penetration testing regime, which failed to reassess high-risk systems regularly; and important risk-sharing practices across departments were lacking, leaving vulnerabilities unaddressed. Moreover, despite repeated internal warnings about security weaknesses, Capita did not implement stronger controls in a timely manner.

Information Commissioner John Edwards condemned the company’s failures as a serious breach of trust. “Capita failed in its duty to protect the data entrusted to it by millions of people. The scale of this breach and its impact could have been prevented had sufficient security measures been in place,” he said. Edwards stressed the importance of proactivity in cybersecurity across all organisations, large or small, noting that complacency is no longer an option given the increasing frequency of high-profile cyberattacks.

The ICO’s fine was split between Capita plc (£8 million) and its pensions arm, Capita Pension Solutions Limited (£6 million). The latter processes data for over 600 pension schemes, with 325 affected by the breach, amplifying the wider repercussions of the attack. While the ICO initially proposed a much heftier £45 million penalty, Capita’s full cooperation throughout the extensive investigation and subsequent cybersecurity improvements led to a reduction in the fine to £14 million. Capita accepted the penalty without contesting it and has since committed to enhancing its cybersecurity posture under new leadership, including the appointment of CEO Adolfo Hernandez.

In response to the breach, Capita offered affected individuals 12 months of free credit monitoring through Experian and established a dedicated helpline, with over 260,000 people enrolling in the monitoring service. The company also completed a thorough forensic analysis to understand and mitigate the impact.

Financially, the breach and resulting penalties have significantly affected Capita’s outlook. The company has revised its guidance for 2025, now expecting a free cash outflow before business exits of between £59 million and £79 million, up from earlier estimates of £45 million to £65 million. Despite this, Capita remains optimistic about returning to positive cash flow by the end of 2025.

The Capita case has broader implications for businesses across the UK. It demonstrates that no organisation is immune from cyber risks and regulatory scrutiny. The National Cyber Security Centre (NCSC) recently reported a doubling in “highly significant” cyber incidents year-over-year, highlighting the growing threats. Following Capita’s settlement, the ICO has emphasised adherence to fundamental security principles like the principle of least privilege and timely response to security alerts. The financial and reputational damage experienced by Capita reinforces the escalating cost of cybersecurity negligence in an era of increasingly sophisticated ransomware attacks.

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Source: Fuse Wire Services