The level of IT failures at major banks has been branded “unacceptable” by MPs.
The Treasury select committee on Monday published the findings of its inquiry into IT failures at banks. It concluded that outrage rates are rising, “with the impact ranging from inconvenience or harm to customers though to threats to a firm’s viability.”
“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,” Steve Baker, the MP who led the Treasury select committee report report, said in a statement.
Consumer group Which? estimated earlier this year that banks are suffering IT failures at a rate of more than one a day.
As well as growing failure rates, the select committee found customers are increasingly reliant on online banking due to disappearing bank branches and cash machines.
The committee criticised banking regulators for allowing lenders to set their own terms for what was an acceptable level of tech failures. The report called for regulators like the Financial Conduct Authority (FCA) to extract more money from banks to pay for IT experts that can keep on top of the failings.
“The regulators must take action to improve the operational resilience of financial services sector firms,” Baker said. “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.”
Baker and his colleagues also called for enforcement action against individual executives when IT systems fail.
“To ensure accountability for failures, regulators must have teeth and be seen to have teeth,” the committee said.
Stephen Jones, chief executive of banking lobby group UK Finance, said in a statement: "The industry continues to invest billions to ensure systems, human and digital, are robust and secure. When incidents do occur, firms work around the clock to minimise disruption and get services back up and running as quickly as possible.
The issue of bank IT failings became headline news last year after TSB’s botched migration to a new IT system. The tech failure cost the bank over £300m, led to an exodus of 80,000 customers, and provoked an inquiry by MPs and the regulator.
“Our inquiry into Service Disruption at TSB remains open, and I’ve no doubt that the Committee will want to examine Slaughter and May’s report and the progress of the regulators’ investigation,” Baker said on Monday.