FTC Safeguards - Your "Qualified Individual"

Section 314.4 (a)

Under the Federal Trade Commission's Safeguards Rule, all financial institutions – including companies that engage in lending, collecting debt, transferring funds, or providing financial advice – must develop, implement and maintain a comprehensive information security program to protect customer data.

A key component of this program is designating a "Qualified Individual" to take ownership and provide leadership over your security efforts.

Here are some important considerations around selecting the right Qualified Individual for your organization:

No Specific Credentials Required

Despite the title implying otherwise, the Qualified Individual is not required to possess any specific credentials, such as a degree or certification. The most important factor is that they have the necessary knowledge and experience to create and implement a security program that is suitable for your business environment and the risks involved.

This experience could come from an existing employee who has proven cybersecurity skills and institutional knowledge, or an outside consultant or service provider who specializes in information security for your industry. The key is ensuring they truly understand your systems, processes and the threats you face.

Small Business vs. Enterprise Needs

The background and expertise required of a Qualified Individual will naturally vary based on the size and complexity of your organization. A small lending company, for example, may only need someone with general IT and security best practice experience.

A large financial corporation with disparate systems and high volumes of sensitive data, on the other hand, would likely require a dedicated Chief Information Security Officer (CISO) or equivalent leadership role with advanced technical abilities, risk management skills and the bandwidth to oversee comprehensive security controls and response plans.

Maintaining Oversight and Accountability

If you choose to work with an external service provider to fulfill the Qualified Individual role, your responsibility doesn't end there. The FTC still holds your company accountable for overseeing that provider and ensuring they maintain security protections that safeguard your customer data.

You must therefore designate an internal employee, likely in a senior leadership position, to directly supervise and maintain accountability over the third-party's security efforts on your behalf. This individual doesn't necessarily need to be a technical expert themselves, but they should understand what's required to properly oversee the outside provider's work.

A Strategic Mindset

Effective security requires looking at the big picture and long-term strategy, not just putting out daily fires. Your Qualified Individual should be able to develop a comprehensive security roadmap that aligns with and enables your overall business objectives.

The Right Skills and Backing Whether an internal employee or external provider, the Qualified Individual must have adequate authority, resources, and cross-functional skills in areas like risk analysis, policy and controls, security testing, incident response planning and more.

If outsourcing security leadership, be sure the provider has its own robust security program in place and that you still designate an internal employee to oversee them.

Additionally, if hiring an affiliate organization or service provider to serve as your Qualified Individual, they too must maintain their own comprehensive security program to safeguard your organization and customers.

By carefully selecting the right leadership through the Qualified Individual role – whether an internal employee or external resource – you'll be well-positioned to meet the robust requirements of the FTC Safeguards Rule while implementing a security program that truly protects your customers' sensitive data and your organization's future.

Get in touch if you have any other questions about the FTC's guidance on this critical security leadership role at info@icomply.online.