The council has ordered a review its data security policy
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Bank account information and personal details of nearly 1,400 people in Wiltshire have been lost after a memory stick went missing in the post.
All the affected people, who live in the Salisbury area, have been sent a letter from Wiltshire County Council's chief executive Keith Robinson.
Mr Robinson apologised, but said the data was password protected.
"Clear procedures for sending data... were not followed. We are investigating why this happened," he said.
"Fortunately personal data is routinely encrypted and password protected so we judge the risk of misuse to be small.
"In the light of this error, I am commissioning a review into our data security, by our audit and IT services. I shall report publicly on the review to the council's executive not later than May."
The memory stick was sent from Salisbury District Council to Wiltshire County Council and then back to Salisbury, but at some point the envelope was torn and the memory stick lost.
"We have looked very hard for it and I'm afraid that we have not been able to find it. The memory stick information included your name, address and bank details, which we hold in order to pay your benefits.
"We do not think that you are at any significant risk, because the information on the memory-stick is secure.
"Nevertheless, I thought it was important to let you know what has happened. Although the risk is low, the advice is that you should monitor your bank statements carefully to make sure that there are no unexplained transactions," Mr Robinson said.
The data comprised the names, addresses and bank details of approximately 1,385 people in the Salisbury area held for housing benefit reasons.
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