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Number of bank IT failures is unacceptable, says MPs

Joanna Faith
Written By:
Joanna Faith

MPs have called the level of IT failures at banks “unacceptable” and say regulators must do more to improve the resilience of the financial services sector.

With bank branches and cash machines disappearing, IT failures have left customers who rely on online banking services without access to their money. While completely uninterrupted access to banking services is not achievable, prolonged IT failures should not be tolerated, a report by the Treasury Select Committee said.

The MPs said firms should resolve complaints and award compensation quickly and that regulators should hold individuals and firms to account for their role in poor operational resilience.

The report said: “We have yet to see a successful enforcement case…against an individual following an IT failure, which may be evidence of an ineffective enforcement regime. If future incidents occur without sanction, parliament should consider whether they regulators’ enforcement powers are fit for purpose.”

One of the most high-profile IT glitches saw thousands of TSB customers locked out of their accounts for weeks in April last year.

The MPs said regulators must provide the outcome of their investigation into the TSB debacle “as soon as possible”.

Firms are also not doing enough to mitigate the operational risks they face from their own legacy technology, which can often lead to IT incidents, according to the report.

It said firms should not be able to use the cost or difficulty of upgrades as excuses to not make vital upgrades to legacy systems.

Steve Baker, the Treasury Committee’s lead member for this inquiry, said: “The number of IT failures that have occurred in the financial services sector, including TSB, Visa and Barclays, and the harm caused to consumers is unacceptable.

“The regulators must take action to improve the operational resilience of financial services sector firms. They should increase the financial sector levies if greater resources are required, ensure individuals and firms are held to account for their role in IT failures, and ensure that firms resolve customer complaints and award compensation quickly.

“For too long, financial institutions issue hollow words after their systems have failed, which is of no help to customers left cashless and cut-off.”