Consumers should be able to compare banks by IT failures after "shocking" outages

28 October 2019

Customers will be given more information on the frequency of bank IT outages so they are better able to compare and choose a reliable provider

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Banks would be expected to report publicly and prominently the number of technology 'incidents' to prospective and existing customers, in the same way they display wait times and complaints procedures in-branch, say MPs.

The move is part of a crackdown by MPs on banks as punishment for a series of technology failures, including at TSB, Visa and Barclays, that have left millions of customers stranded without access to their cash.

The report by the Treasury Select Committee states: “Prolonged IT failures should not be tolerated. The current level and frequency of disruption and consumer harm is unacceptable.”

High-profile banking outages have led to huge numbers of complaints, leaving customers struggling to make contact with their financial services providers, and in some cases waiting months for their requests for compensation to be resolved, a situation MPs call “shocking and unacceptable.”

MPs on the committee are calling on banks and other firms to act faster to improve their capability to deal with complaints in the event of a widespread failure or face enforcement action by the regulator, the Financial Conduct Authority (FCA). 

Steve Baker MP, the Treasury Committee’s lead member on the inquiry, says: “The number of IT failures that have occurred in the financial services sector and the harm caused to consumers is unacceptable.

“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.”

Regulatory intervention

The report compares the need for finance companies to overhaul how they prevent IT failures, and deal with their fallout, to protections put in place in the wake of the 2008 financial crisis.

The report says: “Further regulatory intervention is needed to improve the operational resilience of the financial services sector, as was required over the past decade for its financial resilience.”

Beefed up staff levels at industry regulators to monitor and enforce bank standards for lowering the number and extent of IT problems was also advocated by the MPs.

“Regulators must maintain a very low tolerance for service disruption by providing guidance on what level of impact should be tolerated,” the report states, adding, “regulators cannot allow firms to set their own tolerance for disruption too high, to avoid lax operational resilience.”

MPs have sought to clampdown on financial companies’ failure to act to improve flagging IT systems, and to better manage upgrades, both of which have caused customer problems.

If improvements in firms’ management of legacy IT systems are not forthcoming, the regulators must intervene to ensure that firms are not exposing customers to risks, the report adds.

“As time and cost pressures may cause firms to cut corners when implementing change programmes, the regulators must adopt a proactive approach to ensure that customers are protected.”

Ongoing inquiries 

The Treasury Select Committee, the FCA and law firm Slaughter and May are all conducting various inquiries into the months long IT disruption at TSB.

The bank has said the problems cost it £300m and led to 80,000 customers switching.

All customers are increasingly expected to reply on online banking services as high-street branches and cash machines disappear, leaving millions vulnerable to being left without access to cash and other financial services during IT failures.

Responding to the Treasury Committee's report, banking trade body UK Finance chief executive Stephen Jones says: "Operational resilience is crucial in a modern financial system and 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.”

Comments

TSB was failing again last night for over an hour or more

Kept trying to login on late evening of 29/10/2019 and lo and behold apprently I was not using any valid uid/pw etc. Eventually the system suggested there was a temporary! issue. The system was extremely slow and clunky and at times leaving me with an empty screen. My wife also was affected from her laptop as well.

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